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# Chapt 4 quiz -Aggregate expenditure & equilibrium output

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The Keynesian Theory of Consumption 1) The MPC is A) the change in consumption divided by the change in income. B) consumption divided by income. C) the change in consumption divided by the change... in saving. D) the change in saving divided by the change in income. Answer: A 2) The MPS is A) the change in saving divided by the change in income. B) 1 + MPC C) income divided by saving. D) total saving divided by total income. Answer: A 3) Saving equals A) Y - C. B) Y - planned I. C) Y - actual I. D) Inventory changes. Answer: A 4) If the MPS is .60, MPC A) is 1.60. B) is .30. C) is .40. D) cannot be determined by the given information. Answer: C 5) If you earn additional \$500 in disposable income one week for painting your neighbor's house, A) the total of your consumption and saving will increase by more than \$500. B) the total of your consumption and saving will increase by \$500. C) the total of your consumption and saving will increase by less than \$500. D) your consumption will increase by more than \$500, even if your MPS is 0.1. Answer: B 6) If Logan received a \$2,500 bonus and his MPS is 0.20, his consumption rises by \$________ and his saving rises by \$________. A) 500; 100 B) 2,500; 200 C) 2,000; 500 D) 2,500; 20 Answer: C 7) Saving is a ________ variable and savings is a ________ variable. A) flow; flow B) stock; stock C) flow; stock D) stock; flow Answer: C 8) Uncertainty about the future is likely to A) increase current spending. B) have no impact on current spending. C) decrease current spending. D) either increase or decrease current spending. Answer: C 9) Higher interest rates are likely to A) have no effect on consumer spending or saving. B) decrease consumer spending and increase consumer saving. C) decrease both consumer spending and consumer saving. D) increase consumer spending and decrease consumer saving. Answer: B [Show More]

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