The slope of the consumption function is equal to the marginal propensity to save (MPS).

The slope of the consumption function is equal to the marginal propensity to save (MPS).
 a. True
  b. False
  Indicate whether the statement is true or false

QUESTION 2

Banks in need of reserves can borrow from the Fed or in the federal funds market.
 a. True
  b. False
  Indicate whether the statement is true or false

QUESTION 3

An increase in the marginal propensity to consume (MPC) will cause the consumption function to become steeper.
 a. True
  b. False
  Indicate whether the statement is true or false

QUESTION 4

In commercial banking operations, there is a trade-off between liquidity and profitability.
 a. True
  b. False
  Indicate whether the statement is true or false

QUESTION 5

The slope of the consumption function equals the marginal propensity to consume.
 a. True
  b. False
  Indicate whether the statement is true or false

QUESTION 6

Banks are permitted to lend all of their reserves.
 a. True
  b. False
  Indicate whether the statement is true or false

QUESTION 7

As disposable income decreases, saving decreases.
 a. True
  b. False
  Indicate whether the statement is true or false