the two parts of the keynesian consumption function are consumption that depends on and consumption that depends on a. money; wealth b. planned spending, unplanned spending c. disposable income; factors other than disposable income d. real income; nominal income
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the two parts of the keynesian consumption function are consumption that depends on and consumption that depends on
a. money; wealth
b. planned spending, unplanned spending
c. disposable income; factors other than disposable income
d. real income; nominal income
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- Because consumption is largely determined by_________ income, consumption is _________equally distributed than current income.a. permanent; moreb. permanent; lessc. transitory; mored. transitory; lessQ.1.14 In the Keynesian model, what is the most important determinant of ahousehold’s consumption?(a) Disposable income.(b) Total wealth.(c) The number of persons in the household.(d) Its’ net wealth. Q.1.15 Induced consumption is: (a) the part of consumption which is independent of the level of income.(b) the minimum level of consumption that is financed from sources otherthan income.(c) The maximum level of consumption that is financed from sources otherthan income.(d) shown by the slope of the consumption function.Q.1.16 In the Keynesian model, an introduction of a proportional tax will: (a) increase the slope of the consumption function.(b) reduce the multiplier.(c) increase the equilibrium level of income.(d) increase the multiplier.Q.1.17 A decrease in the price level will: (a) shift the AS curve to the left.(b) shift the AD curve to the left.(c) shift the AS curve to the right.(d) leave both the AD curve and the AS curve unchanged.Answer the following questions concisely. Differentiate aggregate expenditure from consumption expenditure. What is disposable income? Explain the following: 1.Marginal propensity to consume 2.Induced expenditure 3.Savings 4.Life Cycle theory of Consumption
- The consumption function is relationship between consumption and: Select one: a. planned aggregate expenditure. b. total spending. c. investment. d. disposable income.elaborate 3 determinants in which consumption can be increased according to the consumption functionHome equity is the single largest component of net wealth for most families in the United States. If home equity falls a. autonomous consumption will decrease, shifting the aggregate planned expenditure line downward b. the marginal propensity to consume will decrease, decreasing the slope of the aggregate planned expenditure line c. autonomous consumption will increase, shifting the aggregate planned expenditure line upward d. the marginal propensity to consume will decrease, increasing the slope of the aggregate planned expenditure line e. autonomous consumption will decrease, shifting the aggregate planned expenditure line upward
- The change in consumption divided by the change in disposable income is equal to A. household saving. B. the slope of the consumption function. C. real GDP. D. aggregate expenditure.Which of the following is not a valid expenditure function? UP UP None of these can be expenditure functions Pa+Py P+P (P. + P,) Vū(P, -8, Ve UnThe fact that marginal propensity to consume (MPC) is larger than 0 means that a. Consumption will decrease following a decrease in current income b. Consumption will increase following a decrease current income c. Consumption will increase following a decrease in future income s. Consumption will decrease following as increase in current income
- On the graph of the consumption function, the horizontal axis measures vertical axis measures A. real GDP; real aggregate expenditure B. real consumption spending; real national income C. real national income or real GDP; real consumption spending D. real disposable income; real national income The graph on the right shows a consumption function, C₁. The current income-consumption combination is shown by point A. while the Suppose the level of income increases. 1.) Use the point drawing tool or the line drawing tool (as appropriate) to show the impact of the increase in income. Label the new income-consumption combination 'B' or the new consumption function, if any, C₂. Suppose there is an increase in expected future income. 2.) Use the line drawing tool to show the impact of such an increase. Label the new consumption function C3. Carefully follow the instructions above, and only draw the required objects. O 10,000- 9,000+ 8,000- 7,000- 6,000- 5,000- 4,000- 3,000- 2,000- 1,000- 0- A…What is the vertical intercept of the consumpation function that represents the portion ofconsumption expenditure not associated with a level of disposable income?a. Consumption interceptb. Disposable income intercept c. Autonomous consumption d. Automatic consumption lineAnswer the questions on the basis of the information given in the following diagram: Guideline Consumption Consumption function 360 54 360 National income 1. The Marginal Propensity to Consume (MPC) equals: A. 0.70 B. 0.75 C. 0.80 D. 0.85 pe here to search