Using Real GDP on the Horizontal Axis Instead of Real

question 264

Multiple Choice

Using real GDP on the horizontal axis instead of real disposable income implies that a marginal propensity to consume 0.8 generates for every additional $100 of real GDP

• A) $80 of additional real disposable income.
• B) $18 of additional saving.
• C) $80 of additional consumption spending.
• D) $20 of additional saving and taxes.

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Definitions:

Purchase Price

The amount of money paid to acquire a product or service.

Cash

Cash in the form of coins or paper money, ready for trading or banking activities.

Beginning Balance

The amount of money or value of an account at the start of a new accounting period.

Ending Balance

The final amount in an account at the end of a reporting period, after all additions and subtractions have been accounted for.