The marginal propensity to save (MPS) is ? A. the average amount of income that is savedB. the fraction of a change in income that is saved C. the ratio of saving to income D. the ratio of income to saving

Disposable income is the part of households income left after the deduction of ? A. income tax and social security paymentsB. taxes and the addition of benefits C. income tax D. contractual payments such as pensions and mortgages

In the equation C = a + bY, which describes the aggregate consumption function ‘b’ stands for ? A. The marginal propensity to consume. B. The amount of income when consumption is zero C. The average consumption level D. The amount of consumption when income is zero

The total quantity of goods and services produced (or supplied) in an economy in a given period is ? A. aggregate investment B. aggregate expenditure C. aggregate demandD. aggregate output

An outward shift in the demand for money other things being equals should lead to ? A. A lower interest rate but the same quantity of money B. A higher interest rate but the same quantity of moneyC. A higher quantity of money but lower interest rates D. A higher quantity of money but the…

To reduce the supply of money the government could ? A. Reduce interest rates B. Buy back government bonds C. Sell government bondsD. Encourage banks to lend

According to the quantity theory of money an increase in the money supply is most likely to lead to inflation if ? A. The velocity of circulation decreaseB. The number of transaction decrease C. There is deflation D. The velocity of circulation and the number of transactions is constant

The liquidity trap occurs when the demand for money ? A. Is perfectly interest elastic B. Is perfectly interest inelastic C. Means that an increase in money supply leads to a fall in the interest rate D. Means that an increases in the money supply leads to an increases in the interest rate

The difference between goes investment and net investment is ? A. Depreciation B. AccelerationC. Declaration D. Capital investment

Investment is a unstable element of aggregate demand because it depends heavily on ? A. Government policy B. Expectations C. National income D. Historic trends