Question: Which of the following would shift the consumption schedule downward?

Answer: an increase in the probability of a recession

Question: Refer to the consumption schedule above. At income level 3, the amount of consumption is represented by the line segment:

Answer: GH

Question: The so-called Paradox of Thrift that became quite obvious in the Great Recession of 2007-2009 refers to all of the following, except:

Answer: In trying to spend less now, consumers will end up spending more later on

Question: An MPC value of less than 1.0 indicates that as income increases:

Answer:

Question: The fraction, or percentage, of total income which is saved is called the:

Answer: Average propensity to save

Question: The simple multiplier formula assumes the following, except:

Answer: Firms will raise prices as buyers buy more of their output

Question: The MPC can be defined as the:

Answer: Change in consumption divided by the change in income

Question: The so-called wealth effect will result in households:

Answer: Spending more and saving less

Question: Personal saving is equal to:

Answer: Disposable income minus consumption

Question: During the Great Recession of 2007-2009, real interest rates:

Answer: Declined to about zero, and investments also declined sharply