Author Question: In the above figure, when real disposable income is less than 600, then A) consumption is less ... (Read 66 times)

cagreen833 · **on:** Jun 30, 2018

In the above figure, when real disposable income is less than 600, then

A) consumption is less than disposable income. B) consumption is the same as disposable income.
C) consumption is more than disposable income. D) the MPC will fall.

Question 2

An indirect effect of an increase in the price level works through

A) changes in trade balances as domestic goods become more expensive, causing interest rates to move in the opposite direction from the change in the exchange rate.
B) interest rates as people save more as the higher prices make their money balances less attractive.
C) people substituting out of domestic goods and into foreign goods as exchange rates rise.
D) interest rates as people borrow to maintain their money balances, bidding up interest rates and reducing total planned real expenditures.