Macroeconomics Chapter 10
The direct relationship between MPC and the multiplier is shown in the following equation?
1/(1-MPC)
The owner of a manufacturing company is considering whether or not to invest in a new sanding machine that costs $1,000. Net expected revenue after installation of the machine is $1,100. What is the expected rate of return?
10%
Economists use what term to mean "total" or "combined"?
Aggregate
The ___ propensity to consume is the fraction or percentage of total income that is consumed?
Average
____ propensity to save equals saving divided by income?
Average
The fraction or percentage of total income that is consumed is called the?
Average Propensity to Consume
What does saving divided by income equal?
Average Propensity to Save
The ___ schedule shows the various amounts that households would plan to spend at each of the various levels of disposable income.
Consumption
When real interest rates ___, households tend to borrow more, consume more, and save less.
Decrease
Any factor that leads businesses to collectively expect lower rates of return on their investments ___ investment demand?
Decreases
There is a(n) _ relationship between spending and GDP?
Direct or positive
When developing macroeconomic models, economists change their focus from the relationship between consumption and ___ income to the relationship between consumption and real GDP.
Disposable
The consumption schedule shows the various amounts that households plan to consume at each level of:
Disposable income
The consumption schedule shows the various amounts that households plan to consume at each level of?
Disposable income
The ___ relationship between interest rates and quantity of investment conforms to the law of demand?
Inverse, negative, indirect, downward sloping, or downsloping
A firm's spending on new plants, capital equipment, machinery, and inventory is all considered ___?
Investment
Most of the fluctuations in output and employment over time are due to changes in what?
Investment
Which of the following has historically had the greatest swings in spending?
Investment
_ spending consists of expenditures on new plants, capital equipment, machinery, and inventories?
Investment or Capital
___ spending consists of expenditures on new plants, capital equipment, machinery, and inventories?
Investment, Capital
A change in consumption divided by the change in income is equal to the ___ propensity to consume?
Marginal
The change in consumption divided by the change in income is equal to the ___ propensity to consume?
Marginal
The economic term for "extra" or "a change in" is?
Marginal
The ratio of a change in consumption to a change in the income that caused the consumption change is called the?
Marginal Propensity to Consume
A change in saving divided by a change in income is equal to the?
Marginal Propensity to save
In economic terms ___ means "extra" or "a change in"?
Marginal, margin, incremental, or delta
When real interest rates fall, households tend to borrow ___, consume ___, and save ___?
More, more, less
Consumption and disposable income have what kind of relationship?
Positive
A business is thinking about investing in a new piece of equipment. The expected ___ of return helps the business make the decision about whether or not to invest.
Rate
When developing macroeconomic models, economists change their focus from the relationship between consumption and disposable income to the relationship between consumption and?
Real GDP
The marginal propensity to save is equal to a change in ___ divided by a change in income?
Saving
Spending on _ drains off some of the additional consumption created by the increases in income?
Taxes, imports
The nominal interest rate minus the rate of inflation equals what?
The real interest rate
To economists, the term "aggregate" means?
Total, combined
