Chapter 22 Post Quiz
Consumption and Investment

Matching Questions:

Match the terms on the left with the definition in the column on the right. Enter the lowercase letter of that definition in the box to the left of the question number.

	1. Personal saving	a. the extra amount that people consume when they receive an extra dollar of disposable income.
	2. Personal saving rate	b. personal saving as a percent of disposable income.
	3. Consumption function	c. the marginal propensity to consume.
	4. Marginal propensity to consume	d. shows the relationship between the level of consumption expenditures and the level of disposable personal income.
	5. Slope of the consumption function	e. denotes gross private domestic investment.
	6. Marginal propensity to save	f. assumes that people save in order to smooth their consumption over their lifetime.
	7. Life-cycle hypothesis	g. that part of personal income that is not consumed.
	8. Wealth effect	h. the primary cause of periods of recession and economic growth.
	9. I	i. states that higher wealth leads to higher consumption.
	10. Business expectations	j. a determinant of investment.
	11. Investment fluctuations	k. the fraction of an extra dollar of disposable income that is saved.