Podcast
Questions and Answers
What are the two components of aggregate consumption?
What are the two components of aggregate consumption?
- Autonomous consumption and consumption dependent on income (correct)
- Dependent consumption and savings
- Autonomous consumption and investment
- Marginal propensity to consume and savings
How is the marginal propensity to consume related to income?
How is the marginal propensity to consume related to income?
- It remains constant regardless of income levels
- It increases as income increases
- It varies across individuals based on their income levels (correct)
What is the role of expectations about future income in autonomous consumption?
What is the role of expectations about future income in autonomous consumption?
- Expectations are reflected in investment, not consumption
- Expectations only affect dependent consumption
- Expectations significantly affect autonomous consumption (correct)
- Expectations have no impact on autonomous consumption
How does the slope of the consumption function relate to the marginal propensity to consume?
How does the slope of the consumption function relate to the marginal propensity to consume?
Why might poor households have a higher marginal propensity to consume than wealthy households?
Why might poor households have a higher marginal propensity to consume than wealthy households?
How do wealthy households typically react to variations in current income?
How do wealthy households typically react to variations in current income?
What is the main reason why the slope of the Aggregate Demand (AD) line is below 45°?
What is the main reason why the slope of the Aggregate Demand (AD) line is below 45°?
In the multiplier model, what are considered as leakages from the circular flow of income?
In the multiplier model, what are considered as leakages from the circular flow of income?
How does a fall in investment affect the economy in terms of Aggregate Demand (AD) and output (Y)?
How does a fall in investment affect the economy in terms of Aggregate Demand (AD) and output (Y)?
What signifies a decrease in consumption leading to precautionary savings?
What signifies a decrease in consumption leading to precautionary savings?
During economic fluctuations, how does a higher tax rate impact the multiplier effect?
During economic fluctuations, how does a higher tax rate impact the multiplier effect?
What determines the amount of imports in the context of Aggregate Demand (AD)?
What determines the amount of imports in the context of Aggregate Demand (AD)?
