If C = $3,000 + 0

question 5

Multiple Choice

If C = $3,000 + 0.9Y, which of the following will not be true?

• A)If income is less than $30,000, saving must be negative.
• B)If income is $30,000, then consumers are not saving.
• C)If income equals $40,000, saving must be $0.
• D)The marginal propensity to consume is 0.9.
• E)Autonomous consumption is $3,000.

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Definitions:

Keynes's Followers

Individuals or economists who support or develop the theories of John Maynard Keynes, relating to government intervention in the economy to manage aggregate demand.

Monetary Policy

Actions of a central bank, currency board, or other regulatory committee that determine the size and rate of growth of the money supply, which in turn affects interest rates.

MPC

Marginal Propensity to Consume, the proportion of an increase in income that gets spent on consumption.

Multiplier Effect

The phenomenon where an initial increase in spending leads to a larger increase in income and consumption within the economy.