Question

Aggregate expenditure is total

1. value added in the economy
2. income of households, businesses, governments, and foreigners.
3. revenue from the sale of goods and services.
4. spending on final goods and services.

The MPC can be defined as the

1. change in consumption divided by the change in income.
2. change in income divided by the change in consumption.
3. ratio of income to saving.
4. ratio of saving to consumption.

The relationship between the MPS and the MPC is such that

1. MPC - MPS = 1.
2. MPS/MPC = 1.
3. 1 − MPC = MPS.
4. MPC − 1 = MPS.

The consumption schedule shows the relationship of household consumption to the level of

1. saving.
2. investment.
3. disposable income.
4. the marginal propensity to consume.

The slope of the consumption schedule between two points on the schedule is

1. the ratio of the change in consumption to the change in disposable income between those two points.
2. the ratio of the change in disposable income over the change in consumption between those two points
3. equivalent to one plus the marginal propensity to save.
4. equivalent to the average propensity to consume.

Answer 1