The consumption function relates the consumption expenditure decisions of households to
Investment decisions of firms
The level of disposable income
Saving decisions of households
The nominal interest rate
Keynes assumed the situation of
Full employment
Under employment
Involuntary unemployment
Marginal unemployment
The Marginal Propensity to Consume
ΔS/ΔY
C/y . ΔP/ΔQ
ΔP/ΔQ
ΔC/ΔY
As the MPS increases, the multiplier will:
Decrease
Increase
Either increase or decrease depending on the size of the change in investment
Remain constant
The most important determinant of consumption and saving is the:
Level of bank credit
Level of income
Interest rate
Price level
In the equation C = a + bY, which describes the aggregate consumption function, 'b' stands for?
The marginal propensity to consume
The amount of income when consumption is zero
The amount of consumption when income is zero
The average consumption level
Aggregate demand is the total demand for all goods and services in an economy from
All sectors including the rest of the world
The household sector
The household and government sectors
The fraction of a change in income that is consumed or spent is called:
The marginal propensity of expenditure
The average propensity to consume
The marginal propensity to save
The total quantity of an economy's final goods and service demanded at different price levels is
The aggregate supply curve
The aggregate demand curve
The Phillip's curve
The aggregate expenditure function
What is the marginal propensity to consume?
The ratio of the change in consumption expenditure to the change in disposable income
The percentage of income that is consumed
The percentage of income that is not saved
One minus the fraction of total disposable income that is saved