True or False, if false explain.
1. Saving is defined simply as disposable income minus consumption.
2. If the consumption function has a slope of 4/5, then the saving function must have a slope of .2.
3. Any factor that would shift the consumption function upward would shift the saving function upward also.
4. The average propensity to consume (APC), like the MPC, is simply the slope of the basic, Keynesian consumption function.
5. Given a typical shaped consumption function, as the level of income rises, the APC rises as well.
6. If a consumption function graphically starts at a point above the origin (i.e., has a positive vertical axis intercept), then the saving function must begin below the origin.
7. A dramatic rise in household inflationary expectations could be expected to shift the consumption function downward and the saving function upward.
True or False, if false explain.
1. Saving is defined simply as disposable income minus consumption.
2. If the consumption function has a slope of 4/5, then the saving function must have a slope of .2.
3. Any factor that would shift the consumption function upward would shift the saving function upward also.
4. The average propensity to consume (APC), like the MPC, is simply the slope of the basic, Keynesian consumption function.
5. Given a typical shaped consumption function, as the level of income rises, the APC rises as well.
6. If a consumption function graphically starts at a point above the origin (i.e., has a positive vertical axis intercept), then the saving function must begin below the origin.
7. A dramatic rise in household inflationary expectations could be expected to shift the consumption function downward and the saving function upward.
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The average propensity to consume (APC) equals
| the change in real disposable income divided by the change in consumption expenditures. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| the change in consumption expenditures divided by the change in real disposable income. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| real disposable income divided by consumption expenditures. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| consumption expenditures divided by real disposable income. The consumption function shows how much
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