2 marksBasic Keynesian Models
CAPE Economics Unit 2 · 2015 · Paper 2 · Question 2(a)(iii)
Describe the relationship between MPC and MPS.
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Practise this questionOther parts of this question
- 2(a)(i)Identify the most important determinant of consumer spending and personal saving.[1 mark]
- 2(a)(ii)a)Define marginal propensity to consume (MPC).[2 marks]
- 2(a)(ii)b)Define marginal propensity to save (MPS).[2 marks]
- 2(b)(i)a)Calculate the average propensity to consume (APC).[2 marks]
- 2(b)(i)b)Calculate the average propensity to save (APS).[3 marks]
- 2(b)(ii)Calculate the multiplier and interpret its value.[4 marks]
- 2(c)Distinguish between the 'investment demand curve' and the 'investment curve'.[4 marks]
- 2(d)(i)Using the accelerator model of investment, calculate the change in investment if firms desire to hold 25% of output as inventory and output falls by…[3 marks]
- 2(d)(ii)Calculate the change in investment if firms' desire to hold inventories rise to 30%, with all else remaining constant.[2 marks]
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