ECON 211 - Homework 3 (CH. 10 - 13)
In year 1, Adam earns $1,000 and saves $100. In year 2, Adam gets a $500 raise so that he earns a total of $1,500. Out of that $1,500, he saves $200. What is Adam's MPC out of his $500 raise.
0.80
The sum of the MPC and the MPS must equal 1 because...
All additional income must be spent or saved.
Consumption Schedule: The variable on the vertical (y) axis is _____, and the variable on the horizontal (x) axis is _____. These variable are _____ related.
Consumption Disposable Income Directly
A 5-year increase in the minimum age for collecting Social Security benefits. The consumption schedule with shift _____. The saving schedule will shift _____.
Downward Upward
A large decrease in real estate values, including private homes. The consumption schedule will shift _____. The saving schedule will shift _____.
Downward Upward
What is the fundamental reason that the levels of consumption and saving in the United States are each higher today than they were a decade ago?
Real GDP and disposable income are higher.
Saving Schedule: The variable on the vertical (y) axis is _____, and the variable on the horizontal (x) axis is _____. These variable are _____ related.
Saving Disposable income Directly
The difference between the MPC and the APC is that...
The MPC is the change in consumption divided by the change in income, whereas the APC is total consumption divided by total income.
A sharp, sustained increase in stock prices. The consumption schedule with shift _____. The saving schedule will shift _____.
Upward Downward
An economy-wide expectation that a recession is over and that a robust expansion will occur. The consumption schedule with shift _____. The saving schedule will shift _____.
Upward Downward
A substantial increase in household borrowing to finance auto purchases. The consumption schedule with shift _____. The saving schedule will shift _____.
Upward Downward
