Unit 3 Review Pt. 1

Front

What does MPC stand for?

Back

marginal propensity to consume

Front

What is the formula for calculating MPC?

Back

(change in consumer spending) / (change in disposable income)

Front

If the MPS is equal to 0.1, what is the value of MPC?

Back

0.9

Front

Which of the following has the biggest impact on investment spending? consumption, inflation, interest rates, government spending, price level

Back

interest rates

Front

As the MPC increases:

Back

the expenditure multiplier will increase.

Front

If MPC = MPS, then the value of the spending multiplier is:

Back

2

Front

Which of the following will shift aggregate demand curve to the right: an increase in wealth, pessimistic consumer expectations, contractionary fiscal policy, an increase in the interest rate?

Back

an increase in wealth

Front

Declines in the stock market decrease aggregate demand by decreasing which of the following: the price level, interest rates, consumer wealth, tax revenues?

Back

consumer wealth

Front

Which of the following government actions will shift the aggregate demand curve to the left: a decrease in government purchases, an increase in government purchases, a decrease in taxes, an increase in government transfers?

Back

a decrease in government purchases

Front

A change in consumer spending that results from a change in consumer purchasing power is the ______effect

Back

real wealth