1. The table shows an individual’s planned consumption at different levels of income.

Income ($)	100	200	300	400	500
Consumption ($)	140	220	300	380	460

What can be concluded about changes in the marginal propensity to consume (MPC) and
average propensities to consume (APC) as income rises?

	MPC	APC
A	Constant	Constant
B	Constant	Falling
C	Falling	Constant
D	Falling	Falling

2. Which items in the table are classified as foreign aid?

	Foreign direct investment	Official development assistance	Portfolio investment flows
A	no	no	yes
B	no	yes	no
C	yes	no	yes
D	yes	yes	no

3. An increase in which factor will cause a decrease in investment spending?
A business confidence
B company profits
C interest rates
D national income

4. The diagram shows the relationship between tax revenue and the tax rate.

What is the curve on the diagram called?
A income elasticity curve
B J curve
C Lorenz curve
D Laffer curve

5. The table shows the rate of inflation (consumer prices index) and the monthly percentage rate of
unemployment for the USA over a six month period in 2017.

Month	April	May	June	July	August	September
Rate of inflation (%)	2.2	1.9	1.6	1.7	1.9	2.2
Rate of unemployment (%)	3.9	3.8	3.9	3.9	3.8	3.7

What can be concluded from this table?
A Falling inflation leads to lower unemployment.
B Increasing inflation leads to rising unemployment.
C The rate of inflation correlates exactly with the rate of unemployment.
D The rate of inflation has a marginal effect on the rate of unemployment.

Answers