When we graph consumption as a function of ________ rather than as a function of disposable income, the slope of this consumption function is ________
A) national income; the MPS
B) personal income; the MPS
C) personal income; (MPC - MPS)
D) national income; the MPC
D
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Refer to Figure 13-12. If the diagram represents a typical firm in the designer watch market, what is likely to happen in the long run?
A) The firms that are making losses will be purchased by their more successful rivals. B) Inefficient firms will exit the market and new cost-efficient firms will enter the market. C) Firms will have to raise their prices to cover costs of production. D) Some firms will exit the market causing the demand to increase for firms remaining in the market.
How does the long-run equilibrium of a monopolistically competitive industry differ from that of a perfectly competitive industry?
A) A firm in monopolistic competition will charge a price higher than the average cost of production but a firm in perfect competition charges a price equal to the average cost of production. B) A firm in monopolistic competition will earn economic profits but a firm in perfect competition earns zero profit. C) A firm in monopolistic competition produces an allocatively efficient output level while a firm in perfect competition produces a productively efficient output level. D) A firm in monopolistic competition does not take full advantage of its economies of scale but a firm in perfect competition produces at the lowest average cost possible.
Private savings and thus investment could be increased by which of the following government policies, ceteris paribus?
A) elimination of the corporate income tax B) allowing corporations to use "replacement cost accounting" C) exemption of interest earnings from income taxation D) all of the above.
From 1922 to 1929, the total value of the stock market:
A. more than tripled. B. decreased by nearly 50 percent. C. decreased by nearly 90 percent. D. stayed the same.