# Income and spending

The change in consumer spending divided by the change in disposable income. B. Total consumer spending divided by total income. C. Disposable income divided by consumption. D. The change in disposable income divided by the change in consumption. 2) Assume a consumption function is C = 500 + . 80 Yd. This means A. Consumers will save 80 cents out of each additional dollar in disposable income. B. Consumers will spend $500 in addition to current income. C.

Consumers will spend $500 plus 80 cents out of each dollar of disposable income D. he marginal propensity to consume is . 20. 3) In a model with no government or foreign sector, if saving is defined as S 200+ (0. 1)Y and investment is 10 = 200, what is the equilibrium level of consumption? A. 3,800 B. 3,600 c. 1 soo D. 2,000 E. 1,000 4) In a model with no government or foreign sector, if autonomous consumption is Co = 80, investment is 10 = 70, and the marginal propensity to save is s = 0. 25, equilibrium income is A. 150 B. 0 c.

225 D. 600 E. 750 5) The 45-degree line on a graph relating consumption and income shows: A. all points where the MPC is constant. B. all points at which saving and income are equal. C. all the points at which consumption and income are equal. D. the amounts households will plan to save at each possible level of income 6) If the MPC is . 8 and disposable income is $200, then A. consumption and saving cannot be determined from the information given. B. saving will be C. personal consumption expenditures will be $80.

D. saving will be $40. 7) The MPC for an economy is: A. the slope of the consumption schedule or line. B. the slope of the savings schedule or line. C. 1 divided by the slope of the consumption schedule or line. D. 1 divided by the slope of the savings schedule or line. 8) At the point where the consumption schedule intersects the 45-degree line: A. the MPC equals 1 B. the APC is zero. C. saving equals income. D. saving is zero. Answer the next question(s) on the basis of the following consumption schedule: C 20+ .

Y , where C is consumption and Y is disposable income. 9) Refer to the above data. The MPC is: A) . 45. B) . 20. C) . 50. D) . 90. 10) Refer to the above data. At an $800 level of disposable income, the level of saving is: A) $180. B) $740. C) $60. D) $18. 1 1) In a Keynesian model of income determination, when intended spending is greater than actual output, the adjustment to a new macro-economic equilibrium is based on changes in A. autonomous consumption B. unplanned inventories C. government spending D. net exports E. all of the above