In a Simple Macro Model with No Government and No

question 91

Multiple Choice

In a simple macro model with no government and no foreign trade, the equilibrium level of national income is the level of income at which

• A)aggregate desired expenditure is greater than actual national income.
• B)saving equals consumer spending.
• C)aggregate desired expenditure equals consumer spending.
• D)saving equals income.
• E)aggregate desired expenditure equals actual national income.

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Definitions:

Disposable Income

Income remaining after deduction of taxes and social security charges, available to be spent or saved as one wishes.

Consumption Spending

The total money spent by households in an economy on goods and services.

Marginal Propensity

The fraction of an additional unit of income that is spent on consumption rather than being saved.