Question

Question 18 1 pts Mr. Wiley owns a couple of houses. He lives in the better one. The other house he rents to the Jones family for $20,000 per year. By renting the newer and better house in which he chose to live, he could earn $35,000. Given this information, what would be the contribution of these two houses to U.S. GDP? O $0 $35,000 O $20,000 O $55.000 Question 19 1 pts If the marginal propensity to save out of disposable (after-tax) income is 0.39. what is the marginal propensity to consume? 0.61 1.32 01 0.41

Answer 1

18. Option 3. $20,000.

Explanation: The contribution to GDP is the rent received from the house.

19. Option 1. 0.61

Explanation: Marginal propensity to consume = 1 - Marginal propensity to save = 1-0.39 = 0.61.