The slope of a graph of the consumption function equals the marginal propensity to consume.
Answer the following statement true (T) or false (F)
True
The MPC represents the portion of disposable income that is spent rather than saved.
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An endowment:
A. is the bundle of goods an individual starts out with before trading. B. is the bundle of goods an individual ends up with after trading. C. is the bundle of goods an individual inherits. D. is the bundle of goods and individual donates.
Higher rates of substitution are indicated by _______ values of the marginal rate of substitution.
A. small negative B. large negative C. small positive D. large positive
The substitution effect and the output effect work in the
A. same direction some of the time. B. same direction all of the time. C. opposite direction some of the time. D. opposite direction all of the time.
When there is an expansionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; expand B. increase; raise; decline C. decline; lower; decline D. decline; raise; decline