there are 2 pictures 15) 15) When graphing the consumption function, we include
ID: 1129338 • Letter: T
Question
there are 2 pictures
15) 15) When graphing the consumption function, we include a 45-degree ce line. What is true at the points at which the consumption function crosses this line? A) Planned real saving is zero. B) Real GDP is zero. C) Real disposable income is zero. D) Planned real consumption spending is zero. 2.0 20 25 Real National hoomo por Year (S trillons) 16) In the above figure, the equilibrium level of real GDP is equal to 16 A) $2.0 trillion C) $3.0 trillion. B) $2.5 trillion D) $4.0 trilion. 17) The larger the value of the MPS A) the larger is the value of the MPC B) the smaller is the value of the multiplier C) the larger is the value of the multiplier D) the larger is the value of autonomous consumption. 18) How do increases in the price level affect the position of the C+G 18) X curve and in turn the equilibrium level of real GDP? A) The C+I+G+X curve shifts up, thereby reducing the equilibrium B) The C+I+G +X curve shifts down, thereby increasing the C) The CG+ X curve shifts up, thereby inceasing the D) The C+1+G+X curve shifts down, thereby reducing the level of real GDP equilibrium level of real GDP equilibrium level of real CDP equilibrium level of real GDP 19) The changing of government expenditures or taxes to achieve national 19) economic goals is A) recessionary fiscal policy C) discretionary fiscal policy B) automatic fiscal policy D) inflationary fiscal policyExplanation / Answer
(15) (A)
When Consumption line intersects 450 line, planned savings are zero because consumption equals income.
(16) (D)
Equilibrium is when (C + I + G + X) line intersects 450 line, with real GDP of $4 trillion.
(17) (B)
Multiplier = 1 / MPS
The higher the MPS, the lower the multiplier.
(18) (D)
Higher price level lowers consumption, shifting (C + I + G +X) line downward and lowering real GDP.
(19) (C)
(13) (C)
As interest rate rises (falls), planned investment falls (rises).
(14) (D)
Autonomous consumption is vertical intercept of consumption line.
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