6. Describe the relationship between intended investment and the level of national income.
7. Explain why the marginal propensity to save and the marginal propensity to consume sum to 1.
8. Explain how a decrease in the interest rate will affect autonomous investment.
9. What happens to the saving curve when the consumption curve shifts? What happens to the saving and
consumption curves when taxes are changed? Explain.
10. How can an economy’s consumption expenditures be larger than its national income?
11. What are the marginal propensity to consume (MPC) and the marginal propensity to save (MPS)? How is
the MPC related to the consumption function?
12. Explain how changes in net wealth, the price level, interest rates, and expectations alter the consumption
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