According to the Keynesian model, what are the two components of consumption spending? What determines how consumption changes when real disposable income changes? Explain
What will be an ideal response?
Autonomous consumption is the part of consumption that does not depend on disposable income. It is the amount of consumption expenditures a person makes when disposable income is zero. The other part of consumption varies as real disposable income varies. The marginal propensity to consume is the change in consumption expenditures divided by the change in real disposable income. Keynes argued that when people receive an increase in disposable income, they respond by increasing their consumption expenditures, but by a smaller amount. They also increase their saving.
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The supply of movie tickets at one theater's box office for this Saturday's 4:30 showing of a new movie is
A) perfectly elastic until all seats are filled. B) unit elastic. C) perfectly inelastic. D) elastic.
If a market is such that, at the market equilibrium quantity, the benefit of the last unit produced just equals its marginal cost
a. it has earned a positive economic profit b. it has achieved productive efficiency c. it has achieved allocative efficiency d. it has achieved economies of scale e. there are further trades than can increase producer surplus
Suppliers recognize there is a shortage in the market for their product when they notice that
a. the quantity supplied exceeds the quantity demanded. b. the quantity demanded is falling. c. inventories are falling. d. production exceeds new orders for the product. e. government economists announce a shortage exists.
If the U.S. dollar appreciates, it means that
a. the domestic price level has declined. b. the domestic purchasing power of the dollar has decreased. c. fewer U.S. dollars are required to purchase foreign currencies. d. more U.S. dollars are required to purchase foreign currencies.