In a simple model without government spending or taxation, if C = a +bY where C is consumer spending and Y is GDP which of the following statements are correct? (Note that the algebra is deliberately written differently from the lecture notes to test your understanding!) Note that some of these questions require you to have read relevant sections of Core Unit 13. Select one or more: O a. a is known as the marginal propensity to consume O b. a is the level of consumption when Y is zero O c. b is known as the marginal propensity to consume O d. b is known as the average propensity to consume Oe. The consumption function implies that if GDP is zero, consumption is zero Of. If there is an increase in consumers who engage in "consumption smoothing", this will cause an increase in a and a decrease in b g. If there are more credit-constrained consumers in the economy, this will cause the marginal propensity to consume, to fall O h. If consumption-smoothing consumers become more optimistic about the future, a will increase.

In a simple model without government spending or taxation, if C = a +bY where C is consumer spending and Y is GDP which of the following statements are correct? (Note that the algebra is deliberately written differently from the lecture notes to test your understanding!) Note that some of these questions require you to have read relevant sections of Core Unit 13. Select one or more: O a. a is known as the marginal propensity to consume O b. a is the level of consumption when Y is zero O c. b is known as the marginal propensity to consume O d. b is known as the average propensity to consume Oe. The consumption function implies that if GDP is zero, consumption is zero Of. If there is an increase in consumers who engage in "consumption smoothing", this will cause an increase in a and a decrease in b g. If there are more credit-constrained consumers in the economy, this will cause the marginal propensity to consume, to fall O h. If consumption-smoothing consumers become more optimistic about the future, a will increase.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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