As the marginal propensity to consume (MPC) decreases, the spending multiplier:

As the marginal propensity to consume (MPC) decreases, the spending multiplier:
a. increases.
b. decreases.
c. remains constant.
d. becomes indefinable.

QUESTION 2

Which of the following items is included when computing M1?
a. Coins in circulation.
b. Currency in circulation.
c. Checking accounting entries.
d. All of the above.
e. None of the above

QUESTION 3

In a market economy:
a. collective decision-making is more important than individual decision-making.
b. goods and services are distributed as if by an invisible hand to those who can not afford them.
c. profit provides an incentive to be productive.
d. the distribution of wealth is equitably distributed.

QUESTION 4

The formula to compute the spending multiplier is:
a. 1 / (MPC + MPS).
b. 1 / (1 MPC).
c. 1 / (1 MPS).
d. 1 / (C + I).

QUESTION 5

M1 refers to:
a. the most narrowly defined money supply definition.
b. currency held by the public plus checking account balances.
c. the smallest of the money-supply definitions.
d. all of these.

QUESTION 6

In a market economy, buyers and sellers communicate their intentions to one another through:
a. government planners.
b. negotiations overseen by government agencies.
c. elected officials.
d. prices.

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As the marginal propensity to consume (MPC) decreases, the spending multiplier:

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