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QUESTION 1 If the interest rate increases, then the O) a. economy will move to a new point along the existing investment demand curve. b. consumption function will shift up. O c, consumption function will shift down. Od. economy will move to a new point along the existing consumption function O e. investment demand curve will shift up QUESTION 2 Which of the following statements is frue concerning the consumption function? Oa. It slopes upward. b. Its slope equals the MPC. c. It represents the direct (positive) relationship between consumption spending and the level of real disposable income d. If the consumption function lies above the 45-degree line then saving is positive O'e. All of these QUESTION 3 The most appropriate countercyclical policy, or stabilization policy, in times of unemployment, according to classical economists, is for the government to: O a. stimulate aggregate demand. Ob. impose wage and price controls. O e. do nothing Od. cut taxes. Q'e increase the minimum wage