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? Select one or more: a. a is known as the marginal propensity to consume b. a is the level of consumption when Y is zero c. b is known as the marginal propensity to consume d. b is known as the average propensity to consume e. The consumption function implies that if GDP is zero, consumption is zero f. 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 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? Select one or more: a. a is known as the marginal propensity to consume b. a is the level of consumption when Y is zero c. b is known as the marginal propensity to consume d. b is known as the average propensity to consume e. The consumption function implies that if GDP is zero, consumption is zero f. 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 h. If consumption-smoothing consumers become more optimistic about the future, a will increase.
Chapter9: The Keynesian Model In Action
Section: Chapter Questions
Problem 5SQP
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