Is this statement true or false In a model with uncertainty, the propensity to consume out...
Is this statement true or false
In a model with uncertainty, the propensity to consume out of changes in permanent income is higher than the propensity to consume out of a temporary change in income
Homework Answers
For a forward looking consumer first they determine whether that increase in income is permanent or temporary. In case of permanent change in income causes a significant change in propensity to consume. While in case of temporary change in income would not have significant impact on the propensity to consume. This theory was forwarded by Milton Friedman.
True.
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Is this statement true or false
In a model with uncertainty, the propensity to consume out...
explain why the marginal propensity to consume out of a temporary tax rebate would be lower...
explain why the marginal propensity to consume out of a temporary tax rebate would be lower than for a permanent rebate.
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ue or false. MPC+ MPS 1 o True O False Correct. Marginal propensity to consume plus marginal propensity to save equals 1. of aggregate expenditure is 5 MPcio 8 when the MPC is.8 and there is an increase in investment spending of $100,000. x Incorrect. First determine the expenditure multiplier, then multiply that by $100,000 to obtain the correct answer True or false. If people save more of their income, the expenditure multiplier will not decrease and aggregate expenditures will...
True;False or Uncertain A1 In Canada, as well as other countries, the average propensity to consume...
True;False or Uncertain
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4. The marginal propensity to consume is the: a) amount consumed out of an additional dollar...
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Marginal propensity to consume (MPC) is the fraction of extra income that a household spends on...
Marginal propensity to consume (MPC) is the fraction of extra income that a household spends on consumption. a. true b. false
Suppose the marginal propensity to consume out of disposable income for an economy is 0.15. Interpret this number.
Suppose the marginal propensity to consume out of disposable income for an economy is 0.15. Interpret this number.
TRUE-FALSE-UNCERTAIN For each of the following claims, indicate whether it is true or false, or whether...
TRUE-FALSE-UNCERTAIN For each of the following claims, indicate whether it is true or false, or whether it could be either one, depending on circumstances. Then, explain why. Your grade will depend on your explanation. Try to make sure your explanation is not only correct but thorough. In particular, if a statement is false for more than one reason, discuss all those reasons (even though, logically, it takes just one contradiction to make the entire statement false). Doing this will prepare...
Suppose that the marginal propensity to consume if.6 and that there is an increase in government...
Suppose that the marginal propensity to consume if.6 and that there is an increase in government expenditure of 5. a) According to the Keynesian cross model, what is the change in output that results from this policy change? b) Describe the graphical impact that this change will have on the Keynesian cross model c) Why is the change in output different from the change in government expenditure? Explain how this process works intuitively.
Question 2 According to the permanent income hypothesis, how will the paths of borrowing and consumption...
Question 2 According to the permanent income hypothesis, how will the paths of borrowing and consumption change in response to: (a) A temporary decrease in income when it occurs. (3 points) (b) A permanent decrease in income when it occurs. (3 points) (c) Are the answers different if the changes in income are unanticipated, i.e. if they are 'news'? Comment on the size of the marginal propensity to consume and the size of the multiplier. (3 points)
Use the aggregate expenditures model and assume the marginal propensity to consume is 0.90. An increase...
Use the aggregate expenditures model and assume the marginal propensity to consume is 0.90. An increase in government spending of $1 billion would result in an increase in GDP of?
ue or false. MPC+ MPS 1 o True O False Correct. Marginal propensity to consume plus marginal propensity to save equals 1. of aggregate expenditure is 5 MPcio 8 when the MPC is.8 and there is an increase in investment spending of $100,000. x Incorrect. First determine the expenditure multiplier, then multiply that by $100,000 to obtain the correct answer True or false. If people save more of their income, the expenditure multiplier will not decrease and aggregate expenditures will...
True;False or Uncertain
A1 In Canada, as well as other countries, the average propensity to consume (the ratio of consumption to disposable income) has been fairly constant over time, while cross-sectional information shows that richer households tend to save more as their income rise. These phenomena cannot be explained with our available models.
TRUE-FALSE-UNCERTAIN For each of the following claims, indicate whether it is true or false, or whether it could be either one, depending on circumstances. Then, explain why. Your grade will depend on your explanation. Try to make sure your explanation is not only correct but thorough. In particular, if a statement is false for more than one reason, discuss all those reasons (even though, logically, it takes just one contradiction to make the entire statement false). Doing this will prepare...
Suppose that the marginal propensity to consume if.6 and that there is an increase in government expenditure of 5. a) According to the Keynesian cross model, what is the change in output that results from this policy change? b) Describe the graphical impact that this change will have on the Keynesian cross model c) Why is the change in output different from the change in government expenditure? Explain how this process works intuitively.
Question 2 According to the permanent income hypothesis, how will the paths of borrowing and consumption change in response to: (a) A temporary decrease in income when it occurs. (3 points) (b) A permanent decrease in income when it occurs. (3 points) (c) Are the answers different if the changes in income are unanticipated, i.e. if they are 'news'? Comment on the size of the marginal propensity to consume and the size of the multiplier. (3 points)
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