The relationship between consumption and disposable income is such that as
The federal government’s principal tool in altering consumer spending is
The difference between disposable income and consumption spending is
The relationship between consumer spending and disposable income is called the
The marginal propensity to consume is
When adding the foreign sector to the calculation of aggregate demand, you must
If inventory levels are decreasing, then we should expect
Because business firms must finance most investment expenditures, a key determinant of investment is
U.S. imports depend primarily upon
A) foreign price levels
B) foreign income levels
C) U.S. interest rates
D) U.S. income
Investment will be encouraged when
If the U.S. economy is at full employment and other countries are experiencing severe recessions, we can predict a(n)
When aggregate demand decreases rapidly, the economy is likely to experience
1. Disposable income rises, consumption rises. As there is rise in disposable income, the consumer increases his consumption.
2. Changing personal income tax. If personal tax is high, disposable income falls and therefore consumption falls.
3. Savings. What is left in income after consumption is saved.
4. Consumption function
5. Consumption divided by disposable income. Mpc is the proportion of income that is spend for consumption.
6. Add export and subtract import. Import is subtracted because it already comes under consumption.
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