1.The most important determinant ofconsumption and saving is the:

	A.	price level.
	B.	interest rate.
	C.	level of income.
	D.	level of bank credit.

1. If Carol's disposableincome increases from $1,200 to $1,700 and her level of savingincreases from minus $100 to a plus $100, her marginal propensityto:

	A.	consume is two-fifths.
	B.	consume is three-fifths.
	C.	save is three-fifths.
	D.	consume is one-half.

1. The 45-degree line on a graphrelating consumption and income shows:

	A.	all the points at which saving and income are equal.
	B.	the amounts households will plan to save at each possible levelof income.
	C.	all the points at which consumption and income are equal.
	D.	all the points where the MPC is constant.

1. The consumption scheduleshows:

	A.	that the MPC increases in proportion to GDP.
	B.	that consumption depends primarily on the level of businessinvestment.
	C.	the amounts households intend to consume at various possiblelevels of aggregate income.
	D.	that households consume more when interest rates are low.

1. The APC is calculatedas:

	A.	income/consumption.
	B.	change in consumption/change in income.
	C.	change in income/change in consumption.
	D.	consumption/income

1. the MPC for an economyis:

	A.	1 divided by the slope of the consumption schedule or line.
	B.	the slope of the consumption schedule or line.
	C.	1 divided by the slope of the savings schedule or line.
	D.	the slope of the savings schedule or line.

1. Which one of the following will causea movement down along an economy's consumption schedule?

	A.	An increase in stock prices.
	B.	An increase in consumer indebtedness.
	C.	A decrease in disposable income.
	D.	A decrease in stock prices.

1. Dissaving occurs where:

	A.	consumption exceeds income.
	B.	saving exceeds consumption.
	C.	saving exceeds income.
	D.	income exceeds consumption.