1. Disposable income is equal to A) income minus taxes. B) income plus taxes C)
ID: 1187176 • Letter: 1
Question
1. Disposable income is equal to
A) income minus taxes.
B) income plus taxes
C) income plus saving minus taxes.
D) consumption plus government purchases minus taxes.
E) consumption plus saving minus taxes.
2. If the MPC in an economy equals 0.8, and disposable income falls by $100, consumption spending will fall by
A) $8.00.
B) $0.80
C) $80
D) $20
E) $500
3. Which of the following will cause the consumption-income line to shift upward?
A) An increase in income
B) An increase in taxes.
C) An increase in government spending.
D) All of these answers.
E) None of these answers.
4. The increase in inventories during the year is equal to
A) GDP
Explanation / Answer
CORRECT ANSWERS:
1) A
2)C
3)E
4)A
5)E
6)E
7)B
8)A
9)TRUE
10)TRUE
11)FALSE
12)TRUE
13)FALSE
14)FALSE
15)TRUE
16)TRUE
17)TRUE
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