Question 15

If Kojak's mpc is 0.80, this means that he will:

break even when his disposable income is $8000

spend eight-tenths of any level of disposable income.

Question 16

The wipe-out of roughly $16 trillion in household wealth during the Great Recession created a negative "media-wealth effect"; as applied to the Income-Expenditures model, this is shown by

an upward shift in the consumption function.

a movement along the consumption function, because wealth is the same thing as income

nothing at all--changes in wealth don't affect consumption, only income does

a downward shift of the consumption function.

save two-tenths of any level of income.

spend eight-tenths of any increase (as in change) in disposable income

Question 25

Which of the following is the primary explanation for big swings in the business cycle?

abrupt changes in stock market prices.

changes in consumption.

changes in investment.

changes in the mpc.

The 45-degree line in the Income-Expenditures diagram shows:

all points at which saving and income are equal.

all points where the mpc is constant

all points where aggregate expenditures equals real GDP/income.

recessionary gaps.

what's the 45-degree line?

Public Answer

CT0NVM The First Answerer