978-1259723223 Test Bank TBChap030 Part 7

30-121

written consent of McGraw-Hill Education.

B. $450.

C. $460.

D. $470.

235.

Disposable Income

Consumption

$0

$8

80

160

152

240

224

320

296

400

368

The disposable income (DI) and consumption (C) schedules are for a private, closed economy.

All figures are in billions of dollars. If plotted on a graph, the slope of the consumption

schedule would be

236.

Disposable Income

Consumption

$0

$8

80

160

152

240

224

320

296

400

368

The disposable income (DI) and consumption (C) schedules are for a private, closed economy.

All figures are in billions of dollars. The marginal propensity to save in this economy is

237.

Disposable Income

Consumption

$0

$8

80

160

152

240

224

320

296

400

368

The disposable income (DI) and consumption (C) schedules are for a private, closed economy.

All figures are in billions of dollars. At the $320 billion level of disposable income, the average

propensity to save is

30-123

written consent of McGraw-Hill Education.

B. 0.075.

C. 0.335.

D. 0.925.

238.

Disposable Income

Consumption

$0

$8

80

160

152

240

224

320

296

400

368

The disposable income (DI) and consumption (C) schedules are for a private, closed economy.

All figures are in billions of dollars. If consumption increases by $10 billion at each level of

disposable income, the marginal propensity to consume will

239.

The graph shows the relationship between consumption and income. Which of the following

statements is correct?

240.

The graph shows the relationship between consumption and income. The ratio LM/PL would be

a measure of the

241.

Refer to the accompanying consumption schedule. The marginal propensity to consume is

represented by

30-127

242.

Refer to the accompanying consumption schedule. The average propensity to save at income

level B is represented by

243.

Disposable Income

Consumption

$10,000

$12,000

18,000

26,000

24,000

34,000

30,000

42,000

36,000

50,000

42,000

Refer to the accompanying consumption schedule. If disposable income is $42,000, then saving

is

244.

Disposable Income

Consumption

$10,000

$12,000

18,000

26,000

24,000

34,000

30,000

42,000

36,000

50,000

42,000

Refer to the accompanying consumption schedule. The marginal propensity to consume is

30-129

written consent of McGraw-Hill Education.

Test Bank: II

Topic:

The Income-Consumption and Income-Saving Relationships

245.

Disposable Income

Consumption

$10,000

$12,000

18,000

26,000

24,000

34,000

30,000

42,000

36,000

50,000

42,000

Refer to the accompanying consumption schedule. If disposable income were $34,000, then the

average propensity to save would be about

246. Based on OECD data for 2014, the average propensity to consume (APC) in the United

States is about

30-130

written consent of McGraw-Hill Education.

saving.

Test Bank: II

Topic:

The Income-Consumption and Income-Saving Relationships

247. Which of the following may shift the consumption schedule upward?

248. If the consumption schedule shifts downward, and the shift was not caused by a tax

change, then the saving schedule

249. Which of the following would shift the consumption schedule downward?

30-131

written consent of McGraw-Hill Education.

AACSB: Knowledge Application

Accessibi lity:

Keyboard Navigation

Blooms: Remember

Di f f i c u l t y :

01 Easy

Learning Objective: 30-02 List and explain factors other than income that can affect

consumption.

Test Bank: II

Topic:

Nonincome Determinants of Consumption and Saving

250. An increase in household wealth that creates a wealth effect would shift the

251. The so-called wealth effect will result in households

252. One factor that shifts the consumption schedule is household wealth. Households build

wealth by

30-132

written consent of McGraw-Hill Education.

A. spending their current incomes.

B. spending out of their future incomes.

C. spending their incomes as they earn them.

D. not spending all their current incomes.

253. When consumers decide to increase household debt, this action will

254. Which of the following would shift the saving schedule upward?

30-133

written consent of McGraw-Hill Education.

Topic:

Nonincome Determinants of Consumption and Saving

255. The saving schedule would be shifted upward by

256. If consumers expect prices to rise and shortages to occur in the future, then there will be a

shift

257. As the consumption and saving schedules relate to real GDP, an increase in taxes will shift

30-134

written consent of McGraw-Hill Education.

Blooms: Remember

Di f f i c u l t y :

01 Easy

Learning Objective: 30–02 List and explain factors other than income that can affect

consumption.

Test Bank: II

Topic:

Nonincome Determinants of Consumption and Saving

258. A change in interest rates would shift the consumption schedule and the saving schedule ; a

change in taxes would shift these two schedules _.

259. A lower real interest rate typically induces consumers to

260. A change in the amount saved due to a change in income is represented by a

30-135

written consent of McGraw-Hill Education.

C. change in the marginal propensity to save.

D. change in the marginal propensity to consume.

261.

30-136

written consent of McGraw-Hill Education.

Test Bank: II

Topic:

Nonincome Determinants of Consumption and Saving

Type: Table

262.

263.

264. The Great Recession of 2007–2009 altered the prior behavior of consumers in the

economy by

30-138

written consent of McGraw-Hill Education.

Blooms: Remember

Di f f i c u l t y :

01 Easy

Learning Objective: 30–02 List and explain factors other than income that can affect

consumption.

Test Bank: II

Topic:

Nonincome Determinants of Consumption and Saving

265. The so-called Paradox of Thrift that became quite obvious in the Great Recession of

2007–2009 does not refer to which of the following?

266. The Paradox of Thrift highlights the idea that

267. Two basic determinants of investment spending are

30-139

written consent of McGraw-Hill Education.

A. consumer spending and government spending.

B. expected returns and real interest rates.

C. general price level and the level of output.

D. domestic trade and international trade.

268. An investment demand curve shows the varying amounts of investment that would be

undertaken at various levels of

269. Given the expected rate of return on all possible investment opportunities in the economy,

a(n)

30-140

written consent of McGraw-Hill Education.

Topic:

The Interest-Rate-Investment Relationship

270. If the real interest rate increases,

271. Suppose that new computer software for accounting and analysis at a business has a useful

life of only one year and costs $200,000 before it needs to be upgraded to a new version. The

revenue generated by this software is expected to be $250,000. The expected rate of return

from this new computer software is

272. Assume there are no investment projects that will produce an expected rate of return of 8

percent or more. There are, however, $2 billion worth of investment projects with an expected

rate of return at 7 percent, and an additional $2 billion for every drop of the interest rate by 1

percent. If the real interest rate is 3 percent in this economy, the cumulative amount of

investment at the 3 percent or higher rate of return is