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Exam 5: The Household Consumption Sector

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Question 41

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Which of the following would most likely cause consumption to increase?

A) The stock market crashes
B) A price ceiling is placed on the interest rate that credit card companies can charge
C) Inflationary expectations rise
D) The market for consumer durables becomes saturated

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Question 42

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At what level of disposable income is induced consumption zero?

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Question 43

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The level of consumption _____ as the stock of liquid assets in the hands of consumer rises and it ____ as the level of disposable income rises.

$\begin{array}{cc}\text { Disposable Income } & \text { Saving } \\\$ 35,000 & \$ 8,000\end{array}$ -Calculate the APC.

$\begin{array} { c r } \text { Disposable Income } & \text { Saving } \\\$ 25,000 & \$ 3,000 \\37,000 & 5,000\end{array}$ -Calculate the MPS.

Induced consumption is zero when ___________________________.

When disposable income is 2,000

Milton Friedman is closely associated with the permanent ___________.

-Saving is negative when disposable income is less than

In this graph,the MPC is

$\begin{array} { c c } \text { Disposable Income } & \text { Consumption } \\0 & \$ 4 \text { billion } \\\$ 5 \text { billion } & \$ 8 \text { billion } \\\$ 10 \text { billion } & \$ 12 \text { billion } \\\$ 15 \text { billion } & \$ 16 \text { bllion } \\\$ 20 \text { billion } & \$ 20 \text { billion } \\\$ 25 \text { billion } & \$ 24 \text { billion }\end{array}$ -How much is savings when disposable income is $5 billion?

Over the last 20 years,our APC has

If the APS is .1 and the MPC is .85,the APC is

As the level of disposable income rises and we get to the right of where the C line crosses the 45-degree line,the APC changes from ____________ to __________.

For levels of disposable income to the left of the point where consumption intersects the 45-degree line

When we talk about total saving,we add together personal saving,_______ saving,_______ saving and _______ saving.

Americans spend about ________ on services.

Which statement is true?

$\begin{array}{l}\begin{array} { cc } \text { Disposable Income}&{ Consumption }\\0 & \$ 300 \text { billion } \\\$ 400 \text { billion } & 600 \text { billion } \\800 \text { billion } & 900 \text { billion } \\1200 \text { billion } & 1200 \text { billion } \\1600 \text { billion } & 1500 \text { billion }\end{array}\end{array}$ -How much is the MPS?

$\begin{array} { c c } \text { Disposable Income } & \text { Consumption } \\0 & \$ 4 \text { billion } \\\$ 5 \text { billion } & \$ 8 \text { billion } \\\$ 10 \text { billion } & \$ 12 \text { billion } \\\$ 15 \text { billion } & \$ 16 \text { bllion } \\\$ 20 \text { billion } & \$ 20 \text { billion } \\\$ 25 \text { billion } & \$ 24 \text { billion }\end{array}$ -How much is induced consumption when disposable income is $10 billion?