A decrease in the price level will result in an upward movement along the consumption function. O shift the consumption function downward. O result in a downward movement along the consumption function. O shift the consumption function upward. O make the consumption function steeper.
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- Which of the following will NOT shift the consumption function upward? * O An increase in disposable income O A fall in the real interest rate O An increase in wealth O None of the above shift the consumption function upwardIf a $5,000 increase in income leads to additional savings of $1,250, the marginal propensity to consume is 1.33 0.25 4 O 0.75Suppose the federal minimum wage decreases in the United States. What effect does this have on the consumption function in the United States? O Movement up and to the right alon Upward shift Movement down and to the left along Downward shift
- One of these four answers best explains the effect of disposable income on consumption. Which one? O Disposable income does not determine consumption. O Disposable income is the most powerful determinant of income and determines how much an individual consumes. O When an individual has more disposable income, he or she is likely to consume less. O Disposable income is an important determinant of expected future income.Which of the following is an injection in the circular flow of income? O Investment O Taxes Imports O Consumption 35Which of the following graphs shows the correct effect on the consumption function when there is a decrease in real interest rates and the substitution effect is dominant? Figure A Figure B Total consumption Consumption O a. Figure B O b. Figure A O c. Figure C O d. Figure D Consumption function Figure C Income Income (GDP) Consumption Total consumption Income (GDP) Figure D Consumption function Income
- The graph of the consumption function has consumption expenditure on the vertical axis and Select one: O a. time on the horizontal axis. O b. disposable income on the horizontal axis. O c. the Consumer Price Index on the horizontal axis. O d. the interest rate on the horizontal axis.On a graph of a consumption function, what is the significance of the 45-degree line? O a. It connects all points where desired consumption equals actual disposable income. O b. It connects all points where desired consumption equals desired expenditure. O c. Desired consumption is zero at all points along the 45-degree line. O d. It connects all points where desired consumption equals desired saving. O e. It shows the slope of the average consumption function, against which we measure other consumpfion functionsWhich of the following is likely to have the largest effect on spending? O A. A change in expected future one-year real interest rates O B. A change in the current one-year real interest rate C. Both will have the same effect on spending. D. Neither will have any effect on spending.
- Which of the following is correct as an interpretation of the Keynesian consumption function? None of the others is correct O The Keynesian consumption function implies that your consumption depends on your overall wealth, rather than your current income. The Keynesian consumption function states that as income increases consumption increases more than proportionately. O The Keynesian consumption function is consistent with the observation that consumption can increase even if disposable income remains the same. O The Keynesian consumption function predicts that if your current income is less than your expected future income, you should borrow today to finance your current consumption needs.The slope of the aggregate expenditure line is always this slope equals the than 1. If there are no imports or taxes, O greater: marginal propensity to save O greater: marginal propensity to consume O less; marginal propensity to consume O less; marginal propensity to saveIf output is less than planned aggregate expenditure, there will be Lütfen birini seçin: O A. an unplanned increase in inventories O B. a planned decrease in inventories. O C. no change in inventories O D. a planned increase in inventories O E. an unplanned decrease in inventories