Question

if the Keynesian consumption function is C = 10 +0.8 Yd then, when disposable income is £1000, what is the marginal propensity to consume?
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Answer 1

Answer:

C = 10 + 0.8 Yd then when disposable income is £1000, the average propensity to consume = 810/1000=0.81 Question 6 As income increases: Correct Answer:a) The average propensity to consume gets nearer in value to the marginal propensity to consume Feedback:As income increases the average propensity to consume gets nearer in value to the marginal propensity to consume. Question 7 An increase in consumption at any given level of income is likely to lead to:

150 Correct Answer:a) A fall in savings Feedback:An increase in consumption at any given level of income is likely to lead to a fall in savings. Question 8 Lower interest rates are likely to: Correct Answer:d) Increase spending Feedback:Lower interest rates are likely to encourage borrowing and therefore lead to more spending. Question 9 Friedman's theory of consumption focuses on: Correct Answer:d) Permanent income Feedback:Friedman's theory of consumption focuses on permanent income rather than current income. Question 10 The marginal propensity to consume is equal to: Correct Answer:

151 c) Change in consumption / change in income Feedback:Change in consumption / change in income Question 1 An increase in investment is most likely to be caused by: a