A decrease in the price level will result in an upward movement along the consumption function. O shift the consumption function downward. O result in a downward movement along the consumption function. O shift the consumption function upward. O make the consumption function steeper.

A decrease in the price level will result in an upward movement along the consumption function. O shift the consumption function downward. O result in a downward movement along the consumption function. O shift the consumption function upward. O make the consumption function steeper.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

A decrease in the price level will
O result in an upward movement along the consumption function.
O shift the consumption function downward.
O result in a downward movement along the consumption function.
O shift the consumption function upward.
O make the consumption function steeper.

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D Question 8 When the government lowers income taxes, consumption is O stimulated; rightward shift of O stimulated; movement down along O reduced; leftward shift of O reduced; movement up along Question 9 An increase in the price of a nonlabor input such as oil will cause a movement up the SRAS curve. a leftward shift in the SRAS curve. a rightward shift in the SRAS curve. no change regarding the SRAS curve. , causing a the AD curve.
Use the following graph to answer the next question. Price Level 0 AS3 AS₁ AS₂ Real Domestic Output, GDP Which of the following factors will shift AS1 to AS2? O An increase in real interest rates O A decrease in business subsidies O An increase in input prices O A decrease in business taxes.
Which of the following correctly describes how a decrease in the price level affects consumption spending? Select one: a. A decrease in the price level raises real wealth, which causes consumption to increase. b. A decrease in the price level decreases the amount of money a household needs to buy goods and so raises the interest rate, which causes consumption to increase. c. A decrease in the price level increases the amount of money a household needs to buy goods and so raises the interest rate, which causes consumption to increase. d. A decrease in the price level lowers real wealth, which causes consumption to decrease.
Suppose the marginal propensity to consume in an economy is 0.60. If the disposable income in this economy changes by $50 billion, consumption changes by $ billion 50 40 20 30 O O O O
With consumption expenditure on the vertical axis and disposable income on the horizontal axis, the consumption function intersects the 45-degree line at $8 trillion. This result indicates that O consumption spending is more than $8 trillion because taxes have been paid. O consumption spending is less than $8 trillion because taxes must be paid. autonomous consumption spending is $8 trillion. O consumption spending is $8 trillion when disposable income is $8 trillion.