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195.
Refer to the consumption schedule shown in the graph. At income level 3, the amount of saving
is represented by the line segment
196.
Refer to the consumption schedule shown in the graph. At income level 1, the amount of saving
is
197.
Refer to the consumption schedule shown in the graph. Disposable income equals consumption
at point
198.
Refer to the consumption schedule shown in the graph. The break-even level of income would
be at income level
199.
Refer to the consumption schedule shown in the graph. As income falls from level 3 to level 2,
the amount of
200. An increase in disposable income
30-106
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
saving.
Test Bank: II
Topic:
The Income-Consumption and Income-Saving Relationships
201. The slope of the consumption schedule between two points on the schedule is
202. The fraction, or percentage, of total income which is consumed is called the
203. As disposable income decreases, the
30-107
204. If consumption increases while income remains the same, the average propensity to
consume will
205. If there is a decrease in disposable income in an economy, then
206. If disposable income is $900 billion when the average propensity to consume is 0.9, it can
be concluded that
207. The MPC can be defined as the
208. An MPC value of less than 1.0 indicates that as income increases,
30-109
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
saving.
Test Bank: II
Topic:
The Income-Consumption and Income-Saving Relationships
209. If a family's MPC is 0.7, it means that the family is
210. Assume that an increase in a household's disposable income from $40,000 to $48,000
leads to an increase in consumption from $35,000 to $41,000, then the
211. If Matt's disposable income increases from $4,000 to $4,500 and his level of saving
increases from $200 to $325, it may be concluded that his marginal propensity to
30-110
212. If the consumption schedule is a straight line, it can be concluded that the
213. What is the slope of the consumption schedule or consumption line for a given economy?
214. If disposable income increases from $912 to $927 billion and MPC = 0.6, then
consumption will increase by
215. If disposable income decreases from $1,800 to $1,500 and MPC = 0.75, then saving will
216. If the slope of a linear consumption schedule increases in a private closed economy, then it
can be concluded that the
30-112
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
saving.
Test Bank: II
Topic:
The Income-Consumption and Income-Saving Relationships
217. The relationship between the MPS and the MPC is such that
218. The saving schedule shows the relationship of saving of households to the level of
219. If households consume less at each level of disposable income, they are
30-113
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Ac ce ss ibili ty :
Keyboard Navigation
Blooms: Understand
D i f f i c u l t y :
02 Medium
Learning Objective: 30-01 Describe how changes in income affect consumption and
saving.
Test Bank: II
Topic:
The Income-Consumption and Income-Saving Relationships
220. Which of the following statements about consuming in excess of one's disposable income
is not true?
221. Dissaving occurs when
222.
Refer to the given saving schedule. Dissaving occurs when disposable income is
223.
Refer to the given saving schedule. The break-even income would be level
224.
Refer to the given saving schedule. As income falls from level 3 to level 2, the amount of
225. The fraction, or percentage, of total income that is saved is called the
30-117
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Blooms: Understand
D i f f i c u l t y :
02 Medium
Learning Objective: 30-01 Describe how changes in income affect consumption and
saving.
Test Bank: II
Topic:
The Income-Consumption and Income-Saving Relationships
226. If the slope of the consumption schedule is 0.75, then the slope of the saving schedule
227. In an economy, for every $10 million increase in disposable income, saving increases by
$2 million. It can be concluded that the
228. In an economy, for every $1,600 decrease in income, spending falls by $1,200. It can be
concluded that the
30-118
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
B. slope of the saving schedule is 0.75.
C. marginal propensity to consume is 1.33.
D. marginal propensity to save is 0.25.
229. When the marginal propensity to consume is less than 1, the
230. With an MPS of 0.3, the MPC will be
231. In a private closed economy, national income is $4.5 trillion and saving equals $6.4
billion. Based on these data, the marginal propensity to consume
232.
Disposable Income
Consumption
$300
$310
350
340
400
370
450
400
500
430
The table shows a consumption schedule. At the $300 level of disposable income,
233.
Disposable Income
Consumption
$300
$310
350
340
400
370
450
400
500
430
The table shows a consumption schedule. The marginal propensity to consume is
234.
Disposable Income
Consumption
$300
$310
350
340
400
370
450
400
500
430
The table shows a consumption schedule. If disposable income is $550, we would expect
consumption to be
