Question

bc.instructure.co Women's Loungewear & Lounge Pants Missg... ay with me! SI Taxes equal transfer payments Wave Wand - Big bouncy waves - Real GDP equals planned aggregate expenditures Question 14 1 pts You have developed a linear equation that describes the consumption function: C - 100 + 75 Yd. You are trying to explain to your supervisor who does not know economics that if a household has disposable income of $1,000, the household would spend: $750 $4,000 $850 $350 Question 15 1 pts Suppose the marginal propensity to consume changes from 0.75 to 0.90, how will this affect the consumption function? The autonomous consumption will increase The function will exhibit a parallel shift upward Lolololo The slope will get steeper All the above are incorrect 80 000 F5 oll FB 77 5V

Answer 1

14. c. $850

Putting the given values in the consumption function:

C= 100 + 0.75 (1000)

C= 100 + 750

C= $850

15. c. the slope will get steeper

Since MPC is the slope of the consumption function, an increase in the value of MPC means an increase in the value of slope and thus the slope will get steeper.

An increase in autonomous consumption would have resulted in a upward parallel shift in the MPC curve.