In Germany, expected future income increased during 2010. This increase led to
A) a downward shift of the consumption function.
B) an upward shift of the consumption function.
C) a movement upward along the consumption function.
D) no movement along the consumption function and no shift of the consumption function.
E) a movement downward along the consumption function.
B
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Average propensity to consume
A) is the same as the break-even point. B) gives the amount a person changes planned consumption for a change in real disposable income. C) is the amount of consumption that is independent of the level of disposable income. D) is the proportion of total disposable income that is consumed.
Suppose that there are diminishing returns to capital. Suppose also that two countries are the same except one has more capital per worker and so it has more real GDP per worker than the other. Finally, suppose that the saving rate in both countries increases from 4 percent to 7 percent. Over the next ten years we would expect that
a. the growth rate will not change in either country. b. the country that started with less capital per worker will grow faster. c. the country that started with more capital per worker will grow faster. d. both countries will grow and at the same higher rate.
A firm facing a linear demand curve maximizes its total revenue where demand is:
A. perfectly inelastic. B. inelastic. C. elastic. D. unit elastic.
Which statement best describes the behavior of the monopsonist in the labor market?
A. It hires less labor and pays a lower wage rate than in the perfectly competitive case. B. It must pay different amounts to each unit of labor hired. C. It hires less labor but pays the perfectly competitive wage rate. D. It restricts its output to keep the product price high.