Table 11-1
Y =
C + I + G
C =
500 + 0.8(Y?T)
I =
300
G =
700
T =
0.25Y
Refer to Table 11-1. What is the level of saving in this model?

Which of the following would unambiguously increase consumption spending?

a. an increase in real disposable income coupled with a decrease in real wealth b. an increase in real wealth coupled with more pessimistic expectations regarding future income c. a decrease in real disposable income coupled with a decrease in the interest rate d. a decrease in the interest rate coupled with an increase in real wealth e. increased pessimism regarding future income coupled with an increase in the interest rate

The term inflation is used to describe a situation in which

a. the overall level of prices in the economy is increasing. b. incomes in the economy are increasing. c. stock-market prices are rising. d. the economy is growing rapidly.