Real consumption is a function of real disposable income, but the simple Keynesian model uses real GDP instead of real disposable income. This is appropriate since
A. real disposable income is a fixed percentage of real GDP.
B. real GDP is a fixed percentage of real disposable income.
C. we cannot measure either exactly and the purpose of the exercise is theoretical only.
D. real disposable income tends to move proportionately with real GDP.
Answer: D
You might also like to view...
If the exchange rate falls from 120 yen per dollar to 100 yen per dollar, the dollar has ________ and the yen has ________
A) depreciated; appreciated B) appreciated; depreciated C) depreciated; depreciated D) appreciated; appreciated
Identify the correct statement
a. Autonomous consumption equals saving when disposable income is equal to zero. b. Saving is equal to consumption when autonomous consumption is zero. c. The savings function always has a positive intercept when autonomous consumption is positive. d. The consumption and saving function intersect each other when disposable income is zero. e. Autonomous consumption is positive even when disposable income is zero.
The sale of by-products of public goods can sometimes help to finance those goods. Which of the following would not be a by-product of a public good?
A. Having police contract with a newspaper to deliver papers on the morning patrols. B. Charging a fee for GPS signals that come from a defense department satellite. C. Adding software to a computer you are selling in hopes of getting more sales. D. Selling fishing license to fish off of a public bridge.
Suppose the market clearing price is $20 and the price ceiling is $15. The price that prevails in the market will be
A) $20. B) $15. C) less than $15. D) $0.