Question

most economists agree that the immediate determinant of the volume of output and employment is the
ratio of public goods to private goods production.
level of total spending.
composition of consumer spending.
size of the labor force.
question 46
2 pts
(advanced analysis) if the equation ( c = 20 + 0.6y ), where ( c ) is consumption and ( y ) is disposable income, were graphed,
the vertical intercept would be negative, but consumption would increase as disposable income rises.
the vertical intercept would be +20 and the slope would be +0.6.
it would reveal an inverse relationship between consumption and disposable income.
the vertical intercept would be +0.6 and the slope would be +20.

Explanation:

The first question is about the determinant of output and employment in economics. The second question is about the consumption function in economics. The consumption function \(C = 20+0.6Y\) is in the form of a linear equation \(y = mx + b\), where \(b\) is the vertical - intercept and \(m\) is the slope.

For the first question:

• The ratio of public to private goods production (\(A\)) is not the immediate determinant.
• The composition of consumer spending (\(C\)) is part of total spending but not the immediate determinant.
• The size of the labor force (\(D\)) is a long - term factor.
• In Keynesian economics, the level of total spending (\(B\)) is the immediate determinant of output and employment.

For the second question:

• In the equation \(C = 20 + 0.6Y\), comparing with \(y=mx + b\) (where \(y = C\) and \(x = Y\)):
• The vertical - intercept \(b = 20\) (so options \(A\) and \(D\) are wrong as they have incorrect intercept values).
• The slope \(m=0.6\). Since the coefficient of \(Y\) is positive, there is a positive relationship between \(C\) and \(Y\) (so option \(C\) is wrong).

Answer:

For the first question: B. level of total spending.
For the second question: the vertical intercept would be +20 and the slope would be +0.6.