Name:
Period:
AP Macroeconomics Pages: 152-169
Study Questions
1. Very briefly summarize the relationships shown by (a) the consumption schedule, (b)
the saving schedule, (c) the investment demand curve, and (d) the multiplier effect.
2. Explain why an upward shift of the consumption schedule typically involves an equal
downshift of the saving schedule. What is the exception to this relationship?
3. Complete the following table:
Level of
output and
income
(GDP=DI)
$240
$260
$280
$300
$320
$340
$360
$380
$400
Consumption
$
$
$
$
$
$
$
$
$
Saving
$ -4
$0
$4
$8
$12
$16
$20
$24
$28
APC
APS
MPC
MPS
4. While using the table above, if the proportion of total income consumed (APC) decreases and
the proportion saved (APS) increases as income rises, explain both verbally and graphically how
the MPC and MPS can be constant at various levels of income.
Vocabulary
Consumption Schedule:
Saving Schedule:
Break-even income:
Average Propensity to consume (APC):
Average Propensity to Save (APS):
Marginal Propensity to Consume (MPC):
Marginal Propensity to Save (MPS):
Wealth Effect:
Expected Rate of Return:
Investment Demand Curve Multiplier: