Here is a consumption function: C = C0 + MPC(Yd). Which of the following is true about the consumption function?
A) Consumption will rise if autonomous consumption or disposable income rise.
B) Consumption will fall if autonomous consumption falls or if the MPC rises.
C) Consumption will rise if autonomous consumption rises, MPC declines, or disposable income rises.
D) For every $1 rise in autonomous consumption, consumption will also rise by $1.
E) a and d
E
You might also like to view...
Real GDP grows when
I. the quantities of the factors of production grow. II. persistent advances in technology make factors of production increasingly productive. III. human capital grows. A) only I B) both I and III C) only II D) I, II, and III
If the government subsidizes an activity it believes is generates a positive externality and it really only produces an inframarginal positive externality then the subsidization will result in an overproduction of the activity in question
a. True b. False
What is not a benefit from the lower costs of transportation that were achieved through advances in railroads, canals and steamboats? a. Free rider problems were reduced. b. Farmers gained larger shares of the selling price of their crops. c. Consumers paid decreasing shares of the purchase price for transportation and marketing costs
d. New unsettled areas were profitably cleared and added to the nation's economic activity.
If all prices adjusted immediately to balance the quantities supplied and demanded for all goods and services:
A. output gaps would be positive more often than they would be negative. B. potential GDP would rise much more quickly. C. cyclical unemployment would be positive. D. output gaps would not exist.