Consumption in an economy is primarily influenced by ___ and ___.

Household income and consumer preferences

True or False: Autonomous consumption requires a positive income level.

False. Autonomous consumption occurs even when income is zero.

What is the difference between induced consumption and autonomous consumption?

Induced consumption changes with disposable income, while autonomous consumption remains constant regardless of income.

The Marginal Propensity to Consume (MPC) indicates the change in consumption when income changes. What is the range of MPC?

The MPC ranges from 0 to 1.

Fill in the blank: The sum of autonomous and induced consumption is referred to as ___ demand.

Consumer

Riddle: I can be positive or zero, but never negative. I tell you how much of your income you choose to spend. What am I?

Marginal Propensity to Consume (MPC)

What does the Marginal Propensity to Save (MPS) represent?

The change in savings per unit change in income.

True or False: An increase in income leads to a decrease in consumption expenditure.

False. An increase in income generally results in an increase in consumption expenditure.

The Average Propensity to Consume (APC) is defined as ___ per unit of income.

Consumption

True or False: The Marginal Propensity to Save (MPS) is the portion of additional income that is saved.

True

Investment goods differ from intermediate goods in that they are considered ___ goods.

Final

What is the primary impact of investment on an economy?

It enhances the future productive capacity by increasing the stock of physical capital.

Riddle: I am the increase in the stock of capital that builds the future, but I am not labor. What am I?

Investment

The Average Propensity to Save (APS) measures savings per unit change in ___ .

Income

Explain the difference between induced consumption and autonomous consumption.

Induced consumption varies with income changes, while autonomous consumption remains constant regardless of income level.

Income can be defined as the money earned or received from ___, ___, or ___ activities.

Work, investments, production

Aggregate demand is the sum of ___ and ___ expenditure on goods.

Consumption, investment

True or False: Government taxation increases households' disposable income.

False. Government taxation decreases households' disposable income.

What role does government expenditure play in the economy?

Government expenditure adds to aggregate demand by spending on final goods and services.

Fill in the blank: National income can be calculated by adding up all the income earned by individuals, firms, and ___ from various economic activities.

Governments

Riddle: I can be measured by the total output of goods and services, but I am not a physical product. What am I?

Income

How does induced consumption after taxes affect overall income?

Induced consumption after taxes decreases overall income because higher taxes reduce disposable income, leading to lower consumption expenditure.

What is the relationship between income and aggregate demand?

Income is influenced by aggregate demand, as higher aggregate demand typically leads to increased production and income for individuals and firms.

Market equilibrium is achieved when ___ equals ___.

Aggregate demand equals aggregate supply