978-1259723223 Test Bank TBChap030 Part 6

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

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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

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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,

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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

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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

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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

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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

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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

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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