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Econ 2100 - Exam 3 with complete verified solutions

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Econ 2100 - Exam 3 with complete verified solutions

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ECON 2100
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ECON 2100








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Institution
ECON 2100
Course
ECON 2100

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Uploaded on
April 27, 2025
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Written in
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Econ 2100 - Exam 3 with
complete verified solutions
Disposable Income is the sum of what two variables? - answer Savings +
Consumption


What is the most important determinant of consumption? - answer Income


Marginal Propensity to Consume (MPC) - answer Change in consumption/
change in disposable income


Marginal Propensity to Save (MPS) - answer change in savings/change in
disposable income


MPC+MPS= - answer 1


Non-Income Determinants of Consumption and Saving - answer 1. wealth
2. borrowing
3. expectations
4. real interest rates
5. Other Conditions (Taxes...)


Interest Rate - Investment Relationship - answer Lower interest rates create
higher demand for investment


Investments - answer expenditures on new plants, equipment, inventory


Interest Rate - answer Cost of money/ Cost of investment
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