ECON 1010 Study Guide - Quiz Guide: Disposable And Discretionary Income, Consumption Function, Expenditure Function

Aggregate expenditure equals the change in inventories minus GDP.

The change in inventories equals GDP divided by aggregate expenditures.

Aggregate expenditures equals GDP divided by the change in inventories.

Aggregate expenditures equals GDP minus the change in inventories.

The change in inventories equals GDP multiplied by aggregate expenditure.

Disposable income and consumption fall by $10 billion

Disposable income and consumption rise by $10 billion

Disposable income rises by $10 billion and consumption rises by $8 billion

Disposable income falls by $10 billion and consumption falls by $8 billion

Disposable income rises by $10 billion and consumption falls by $8 billion

output will increase

output will decrease

output will remain the same

output will rise slightly and then level off

we cannot determine what will happen to output

illustrates the relationship between real disposable income and real consumption spending

illustrates the relationship between the price level and real consumption spending

is the relationship between productivity and real consumption spending

shows how real consumption increases when real disposable income decreases

illustrates the relationship between real consumption spending and employment

spending in explaining economic fluctuations

labor in explaining economic fluctuations

financial markets in explaining economic fluctuations

output in explaining economic fluctuations

resources in explaining economic fluctuations.

Aggregate expenditure is greater than output, so inventories will increase and output will be raised.

Aggregate expenditure is greater than output, so inventories will decrease and output will be increased.

Aggregate expenditure is less than output, so inventories will decrease and output will be raised.

Aggregate expenditure is less than output, so inventories will increase and output will be lowered.

Aggregate expenditure is greater than output, so inventories will increase and output will be lowered.

7.0

0.7

3.0

3.3

not determinable without additional information.

all types of spending by households and firms

spending and savings by households

spending by households and governments on final goods and services

spending by households, government, firms, and foreigners on final goods and services

all spending and saving by households, firms, and governments

$10,000

$500

$50

$5,000

$9,524

very weak.

virtually flat .

positive and very close to linear.

negative and very close to linear.

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

(GDP = DI)

C

S

APC

APS

$1,500

$1,540

$_____

1.027

–0.027

$1,600

$1,620

_____

1.013

–0.013

$1,700

$1,700

_____

_____

_____

$1,800

$1,780

_____

0.989

0.011

$1,900

$1,860

_____

0.979

0.021

$2,000

$1,940

_____

_____

_____

$2,100

$2,020

_____

0.962

0.038

$2,200

$2,100

_____

_____

_____