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AP ECO CH 8 review

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QuestionAnswer
All else equal A decrease in the real rate of interest will increase the level of inevestment
If the slope of a the consumption line is .8 the MPC is .8
If the MPC is .63, the multiplier is 1/.37
If the interest rate rises Investment spending will decrease
If Margy's MPC is .9, this means that she will: spend 90 cents out of every additional dollar of disposable income
If the MPC is constant for every lvl of disposable income the MPS will also be constant
The multiplier is equal to all of the following: 1/(1-MPC) 1/(MPS) change in real GDP/ initial change in spending
The multiplier process suggests that any intital increase in aggregate expenditures will cause a large increase increase in GDP
If consumption and disposable income are equal at a particular level of income saving must be zero at this point
Which one of the following is not predicted to shift the consumption schedule upward An increase in disposable income
The investment demand curve will shift to the left if Business taxes increase
Increase in disposable income tend to reduce the APC
The multiplier effect magnifies any change in aggregate spending
All else equal, the larger the MPC the larger the multiplier
The consumption schedule is a direct relationship b/wn consump. and dispo. income
In general, the greater the MPS the lower the multiplier
The higher the expected real rate of return on investments the more investment is likely to occur.
The value of the multiplier will increase if the MPS decreases
Created by: Linkzelda41
 

 



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