The Consumption Function

The consumption function relates the amount of household spending to the level of ___________ income.

• disposable

• gross

• net

• taxable

You work in a candy factory that has been making tons of sweet, sweet profit. For all your hard work and dedication, you receive a bonus of $10,000 and an annual raise of 20% of your current salary. Due to this:

• You are likely to increase your total consumption

• You are likely to decrease your total consumption

• Your total consumption will stay the same

MPC is the ___________ of the consumption function.

• slope

• intercept

• derivative

• integral

Disposable income is either used for _______ or _______.

Any increase in disposable income will either be _______ or _______.

• consumed, saved

• invested, wasted

• borrowed, lent

• lost, found

• MPC = 0.89, MPS = 0.11

• MPC = 0.8, MPS = 0.2

• MPC = 0.75, MPS = 0.25

• MPC = 0.67, MPS = 0.33

• MPC = 0.86, MPS = 0.14

• MPC = 0.72, MPS = 0.28

• MPC = 0.90, MPS = 0.10

• MPC = 0.80, MPS = 0.20

• MPC = 0.84, MPS = 0.16

• MPC = 0.80, MPS = 0.20

• MPC = 0.75, MPS = 0.25

• MPC = 0.70, MPS = 0.30

If the Keynesian consumption function is C = 10 + 0.8 Yd then, if disposable income is $1000, what is amount of total consumption?

• $0.80

• $800

• $810

• $0.81

• Cannot be determined

If the Keynesian consumption function is C = 10 + 0.8 Yd then, when disposable income is $1000, what is the marginal propensity to consume?

• 0.8

• 800

• 810

• 0.81

• Cannot be determined