When graphing the consumption function, what purpose is served by the 45-degree line?
A. It identifies all the points where real dissaving and saving are equal.
B. It identifies all the points at which real disposable income and planned real consumption spending are equal.
C. It identifies all the points at which saving and consumption spending are equal.
D. It identifies all the points at which real planned investment expenditure and real autonomous consumption spending are equal.
Answer: B
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Discuss the practical difficulties associated with practicing perfect price discrimination
What will be an ideal response?
A tax system with little deadweight loss and a small administrative burden would be described as
a. equitable. b. communistic. c. capitalistic. d. efficient.
If inflows to the capital stock are greater than outflows, then:
A. Net investment is positive B. Net investment is negative C. Depreciation equals gross investment D. Depreciation is greater than gross investment
Which of the following might be considered an automatic fiscal stabilizer?
A) government spending for the war effort B) 401(k) retirement program C) government budgeting for education D) unemployment compensation