Chapter 10: Savings‚ Investment Spending and the Financial System 1. Given the following information about the closed economy of Brittania‚ what is the level of investment spending and private savings‚ and what is the budget balance? What is the relationship among the three? Is national savings equal to investment spending? There are no government transfers. GDP= $1‚000 million T= $50 million C= $850 million G= $100 million Investment spending is $50 million. The budget balance is
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equals zero. False. When disposable income equals zero‚ consumption is still positive due to autonomous consumption/consumer confidence/c0. 3. The multiplier is greater than 1 if T = 0 and G = 0. True. If the marginal propensity to consume is less than 1‚ it means that people consume less than 100% of their disposable income. It also implies that the multiplier is greater 1 (you can also write down the formula of the multiplier and indicate c1 is less than 1). The fact that T = 0 and G = 0 is
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to produce; concepts of production possibility frontier and opportunity cost. 10 Periods Unit 2: Consumer Equilibrium and Demand 32 Periods Consumer’s equilibrium – meaning of utility‚ marginal utility‚ law of diminishing marginal utility‚ conditions of consumer’s equilibrium using marginal utility analysis. Indifference curve analysis of consumer’s equilibrium-the consumer’s budget (budget set and budget line)‚ preferences of the consumer (indifference curve‚ indifference map) and conditions
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EXAM 2 STUDY GUIDE – CHAPTERS 7 - 10 (partial) ECON 204 SPRING 2013 Chapter 7 Inflation Deflation Effects of Inflation 1. Price effects a. Real vs. nominal income 2. Income effects 3. Wealth effects Money illusion Measuring inflation • Consumer Price Index (CPI) • Market basket Construction of a Price Index 1. Calculate cost of basket in each year 2. Create Price Index using chosen base year = ∗ 100 • Say’s Law Keynesian Theory • Inherently unstable economy • Government
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8/155.6) x 100 = 9.5116 Growth rate = (9.5116 – 8.4196)/8.4196 x 100% = 12.97% 2. When Bill’s disposable income is $55‚000‚ his consumption spending is $47‚000. Suppose his disposable income increases to $75‚000. Suppose his marginal propensity to consume is .70. His new consumption spending will be: a. Less than $52‚000 b. from $52‚000 to $54‚999 c. from $55‚000 to $59‚999 *d. from $60‚000 to $63‚999 e. $64‚000 or higher ANSWER: Change in income = $75‚000 - $55‚000 =$20‚000 Change
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equal for all three budget lines. E) Cannot be determined without studying the indifference curves. 5) 6) Larry consumes only beer (B) and chips (C). The magnitude of the slope of his budget line (with beer measured on the vertical axis) is A) Y/PB. B) PC × PB. C) PC/PB. D) PC/Y. E) Y/PC. 6) 7) The magnitude of the slope of an indifference curve is A) the marginal
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INDEX Chapter No. NAMES Page No. Microeconomics 1 2 3 4 Basic concepts Demand and supply Consumer’s Behaviour Analysis Perfect and Imperfect Competition Macroeconomics 5 6 7 8 National income analysis Consumption‚ Saving and Investment Determination of National Income Monetary and Fiscal Policies Economic Systems 9 10 Capitalism‚ Socialism and Mixed Economic System Islamic Economic System 74 81 33 39 62 69 2 7 15 21 1 ECONOMICS: It is a social science (social science is a science‚ which studies
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an ad valorem tax. (3) [TURN OVER] 3 ECS1028/REC102Y October/November 2010 QUESTION 2 (i) (ii) [6] Use the following diagram to show how the equilibrium in the money market changes if the level of income in the economy decreases. Remember to label your diagram. (3) If the number of United States of America tourists coming to South Africa increases‚ iIllustrate on the following diagram the impact on the value of the Rand on the South African foreign exchange market
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The marginal propensity to consume (MPC) is defined as the additional consumption that results from one dollar increase in disposable income. Bill’s disposable income goes from $100‚000 in 2001 to $200‚000 in 2002‚ and his consumption spending goes from $80‚000 in 2001 to $140‚000 in 2002. Which of the following statements about Bill is true? Bill’s MPC is equal to 0.6. Which of the following changes in disposable income would lead to the greatest increase in consumption? a $20‚000 increase
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AGRICULTURE TUTORIAL SHEET 3 1. What is the aggregate expenditure function? 2. Distinguish between a. Induced and Autonomous consumption. b. The consumption and savings function. c. The average propensity to consume and the average propensity to save. d. The marginal propensity to consume and the marginal propensity to save. 3. How are consumption and savings related? 4. Fill in the blanks in the following table. INCOME CONSUMPTION SAVINGS $1000 $400 2000 900 3000 $1400 4000 MPC MPS APC APS
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