Author Question: If the marginal propensity to consume, MPC, is less than 1 and a household's disposable income ... (Read 59 times)

mckennatimberlake · **on:** Jun 30, 2018

If the marginal propensity to consume, MPC, is less than 1 and a household's disposable income increases by 2,000, the household's consumption will _____.
a. increase by less than 2,000
b. increase by 2,000
c. decrease if the total income of the household is above 100,000
d. remain the same unless the change in income significantly affects the household's wealth
e. increase by more than 2,000

Question 2

The distinction between M1 and M2 has blurred over time because:
a. M1 is now larger than M2.
b. depositors can transfer funds between accounts easily.
c. the Federal Reserve has defined them less precisely.
d. M1 is becoming less liquid.
e. banks are now offering time deposits.