Prove that b = the slope of the consumption function curve explain
Consumption function is given by, C = C1 + bYd
where C1 is the autonomous consumption and thus it is constant, b
is the marginal propensity to consume, and Yd is the disposable
income.
We know that slope of any function is dY/dX. So, here, slope of the
consumption function is dC/dYd as C lies on the Y-axis
and Yd lies on the X-axis.
Now,
from the consumption function as C1 is constant.
So, the slope of the consumption function is b.
8.2. Prove that the slope on a TS diagram of (a) An isochoric curve is T/Cv. (b) An isobaric curve is T/C
If autonomous consumption (Ca) increases, the slope of the consumption function becomes steeper. True False
Consumption-Savings Consider a consumer with a lifetime utility function U = u(Ct) + _u(Ct+1) that satisfies all the standard assumptions listed in the book. The period t and t + 1 budget constraints are Ct + St = Yt Ct+1 + St+1 = Yt+1 + (1 + r)St (a) What is the optimal value of St+1? Impose this optimal value and derive the lifetime budget constraint. (b) Derive the Euler equation. Explain the economic intuition of the equa- tion. (c)...
a) Briefly, explain what the IS curve and the LM curve represent. b) Explain the reason that determines the slope of the IS curve and the factors that would make the IS curve steeper. c) Explain the reason that would determine the slope of the LM curve and outline what would shift the curve to the right. d) Use an IS-LM diagram to illustrate and explain why the interest rate is likely to decline during an economic contraction that is...
The slope of the curve below the thermoneutral zone is determined by Slope Metabolic Rate Ambient Temperature O Rate of oxygen consumption Temperature Thermal conductance
if demand function for money is M/P = 0.5Y-100r, then the slope of LM curve is: a 0.05 b 0.001 c 0.005 d 0.01
. Given that the slope of an indifference curve at any point is the “marginal rate of substitution” between Y and X explain/prove that MRS is equal to the ratio of the consumer’s marginal evaluation of good X to his/her marginal evaluation of good Y (i.e. MRS = -MUx/MUy). (2 pts)
Does industry supply curve slope upward in the long run? explain.
Using the Keynesian consumption function, prove numberically that, as the MPC rises from 0.7 to 0.8, saving declines. SupposeYd equals $10,000 and Co equals $1,000.
6.The Aggregate Demand (AD) curve is obtained by combining: (a) The consumption function, planned investment and the central bank's policy reaction function. (b) The consumption function and the Taylor rule. (c) The equation for PAE, the central bank's policy reaction and Y = PAE. (d) Y=PAE and the consumption function. (e) The equation for planned investment and the central bank policy reaction function. 7.The AD curve is generally assumed to have a negative slope. However, which of the following would...