Answer the following statements true (T) or false (F)
1) The marginal propensity to consume is the ratio of consumption to saving.
2) If people saved more of any extra income that they receive, then the consumption schedule will become flatter.
3) If the consumption schedule becomes steeper, then the saving schedule will become steeper also.
4) If households see the value of their financial assets increase significantly, then the saving schedule will shift upward.
5) The wealth effect will tend to decrease consumption and increase saving.
1) F
2) T
3) F
4) F
5) F
You might also like to view...
The higher the opportunity cost of borrowing, the higher the amount of investment, other things constant
a. True b. False Indicate whether the statement is true or false
Higher interest rates
A. Raise the present value of future payments. B. Lower the future value of current dollars. C. Reflect a higher opportunity cost of money. D. Result in a higher risk premium.