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22.2 The Components of Aggregate Demand
1 ) Keynes reasoned that consumer expenditure is most closely related to ____.
A) the level of interest rates
B) the price level
C) disposable income
D) the marginal tax rate
Answer: C
Diff: 2 Type: MC Page Ref: 542
Skill: Recall
Objective List: 22.1 Utilize the Keynesian cross model for the determination of aggregate output
In the Keynesian model of income determination, consumer expenditure includes spending by
____.
A) consumers on personal computers
B) businesses on personal computers
C) governments on personal computers
D) foreigners on domestic personal computers
Answer: A
Diff: 2 Type: MC Page Ref: 542 - 543
Skill: Recall
Objective List: 22.1 Utilize the Keynesian cross model for the determination of aggregate output
The marginal propensity to consume (mpc) can be defined as the fraction of ____.
A) a change in income that is spent
B) a change in income that is saved
C) income that is spent
D) income that is saved
Answer: A
Diff: 2 Type: MC Page Ref: 543
Skill: Recall
Objective List: 22.1 Utilize the Keynesian cross model for the determination of aggregate output
If the consumption function is expressed as C = a + mpc × YD, then "mpc" represents
____.
A) autonomous consumer expenditure
B) the marginal propensity to consume
C) the expenditure multiplier
D) disposable income
Answer: B
Diff: 2 Type: MC Page Ref: 542
Skill: Recall
Objective List: 22.1 Utilize the Keynesian cross model for the determination of aggregate output