According to the simple Keynesian model, if disposable income rises,
a) the marginal propensity to consume rises
b) savings falls
c) consumption increases
d) the expenditure multiplier rises
e) all of the above
c) consumption increases
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Answer the following statement(s) true (T) or false (F)
1. If the consumer chooses not to purchase potatoes, then the marginal value of potatoes must be less than or equal to the relative price of potatoes. 2. The steeper the indifference curve, the greater the marginal value of a good. 3. If a person is willing to trade one good for another, their new basket after the trade must lie on a lower indifference curve than their original basket. 4. Along a convex indifference curve, the marginal value of a good rises as the quantity of the good rises. 5. When using the composite good convention all other goods are measured in terms of dollars.
Using the above table, the marginal utility for the sixth glass of water is
a. -1 utils b. -3 utils c. -5 utils d. -7 utils e. none of the above
Everything else the same, in the foreign exchange market which of the following increases the demand for U.S. dollars and shifts the demand curve rightward?
A) The U.S. interest rate rises. B) The U.S. exchange rate falls. C) The Japanese interest rate rises. D) The U.S. exchange rate rises. E) The expected future exchange rate falls.
Over a period of time, the equilibrium price of a good increases and the quantity decreases. All of the following could account for this situation, except:
A. An increase in the costs of production B. The removal of a subsidy on the good or service C. The imposition of a sales tax on the good or service D. A decrease in the price of an alternative good or service that producers could also produce