Answer to Question #270164 in Macroeconomics for Audrey

Question

Q.1.13 An increase in the marginal propensity to consume: (2) (1) Shift the aggregate spending function (A) upwards; (2) Shifts the aggregate spending function (A) downwards; (3) Increases the slope of the aggregate spending function (A); (4) Decreases the slope of the aggregate spending function. Q.1.14 If the inflation rate is 6% and Susan receives a 6% increase in income, then, over the year, Susan’s: (2) (1) Real and nominal income both remain unchanged; (2) Real and nominal income both rise; (3) Real income rises but nominal income remains unchanged; (4) Nominal income rises but real income remains unchanged. Q.1.15 Value Added Tax (VAT) is a: (2) (1) Progressive, direct tax; (2) Progressive, indirect tax; (3) Proportional direct tax; (4) Regressive indirect tax.

Answer 1

3.(3) Increases the slope of the aggregate spending function

4.(4) Nominal income rises but real income remains unchanged.

5.(4) Regressive indirect tax.