Macroeconomics question
Using the graph as a reference, suppose an economy's aggregate consumption function is C = $100 billion + 0.6YD.
a. At what level of income do households begin to save?
$ billion
b. By how much does consumption increase when disposable income rises $200 billion beyond the level of income from part (a)?
$ billion
Homework Answers
Answer
a)
the saving function is the form of
S=-a+(1-b)*YD
a=$100 and b=MPC=0.6 then 1-0.6=0.4
S is zero when begins to save
0=-100+0.4YD
0.4Yd=100
YD=100/0.4
YD=250
the level of income do households begin to save is $250 billion
===========
b)
The increase in consumption =MPC* change in disposable income=200*0.6=120
the increase in consumption =$120 billion
Igen Using the graph as a reference, suppose an economy's aggregate consumption function is C =...
Igen Using the graph as a reference, suppose an economy's aggregate consumption function is C = $300 billion +0.5 YO Consumption( billions per year) Nienaeahla Imamale hillinne nervaar < Prev 4 of 10 Next > Consumi 45° Disposable Income(billions per year) Instructions: Enter your responses rounded to the nearest whole number. a. At what level of income do households begin to save? $0 billion b. By how much does consumption increase when disposable income rises $100 billion beyond the level...
Would someone explain to me how to get the answers, please. I need the graphs plotted,...
Would someone explain to me how to get the
answers, please. I need the
graphs plotted, the blue box answer, and the fill in the blanks
answered. Below are the options.
Options for the first graph it says: From the preceding data,
you know that the level of saving in the economy was ($140
billion, $20 billion, $0 billion, $100 billion) and the
marginal propensity to save in the economy is (0.6, 0.8,
0.1, 0.2)
Options for the second graph...
5. Graphing the consumption function from the MPC Consider a hypothetical economy in which the marginal...
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Keynesian Consumption Function (billions of dollars per year) Real disposable income Consumption Saving MPC MPS $100 200 300 400 500 $150 200 250 300 350 a.) Calculate the saving schedule. b. Determine the marginal propensities to consume (MPC) and save (MPS). c. Determine the break-even income. d.) What is the relationship between the MPC and the MPS? 3. Explain why the MPC and the MPS must always add up to one. 4. How do households "dissave" 5. Explain how each...
Igen Using the graph as a reference, suppose an economy's aggregate consumption function is C = $300 billion +0.5 YO Consumption( billions per year) Nienaeahla Imamale hillinne nervaar < Prev 4 of 10 Next > Consumi 45° Disposable Income(billions per year) Instructions: Enter your responses rounded to the nearest whole number. a. At what level of income do households begin to save? $0 billion b. By how much does consumption increase when disposable income rises $100 billion beyond the level...
Would someone explain to me how to get the
answers, please. I need the
graphs plotted, the blue box answer, and the fill in the blanks
answered. Below are the options.
Options for the first graph it says: From the preceding data,
you know that the level of saving in the economy was ($140
billion, $20 billion, $0 billion, $100 billion) and the
marginal propensity to save in the economy is (0.6, 0.8,
0.1, 0.2)
Options for the second graph...
5. Graphing the consumption function from the MPC Consider a hypothetical economy in which the marginal propensity to consume (MPC) is 0.50. That is, if disposable income increases by $1, consumption increases by 50¢. Suppose further that last year disposable income in the economy was $400 billion and consumption was $350 billion. On the following graph, use the blue line (circle symbol) to plot this economy's consumption function based on these data. Consumption Function CONSUMPTION (Billions of dollars) 0 800...
Suppose that disposable income, consumption, and saving in some country are $800 billion, $700 billion, and $100 billion, respectively. Next, assume that disposable income increases by $80 billion, corisumption rises by $56 blillion, and saving goes up by $24 billion. a. What is the economy's MPC? Instructions: Round your answers to 2 decimal places MPC= What Is its MPS? MPS b. What was the APC before the increase in disposable income? Instructions: Round your answer to 2 decimal places. APC...
The aggregate demand function: v =C+I+G - 500 +0.75Y 1000 2800 2000 is plotted on the graph to the right. The graph also shows the 45" line where aggregate output Yoquais aggregate demand for all points. What happens to aggregate output if goverment spending rises by 100? Yodec 2400 2200 2000+ 1800 $1600 The equilibrium level of output nearest billion.) by $ billion. (Round your response to the Consumption Expenditure, C (5 billions) 1400 rises 1200 1000 falls 20045 0...
Consider a country with the national income of $32 billion, the amount of taxes paid by households of $12 billion, and household consumption of $16 billion. Suppose that the marginal propensity to consume (MPC) is 0.7 On the following graph, use the blue line (circle symbol) to plot the economy's consumption function. Note: Select and drag the line segment from the palette to the graph. Then select a point on the line segment and drag it to its desired position...
Keynesian Consumption Function (billions of dollars per year) Real disposable income Consumption Saving MPC MPS $100 200 300 400 500 $150 200 250 300 350 a.) Calculate the saving schedule. b. Determine the marginal propensities to consume (MPC) and save (MPS). c. Determine the break-even income. d.) What is the relationship between the MPC and the MPS? 3. Explain why the MPC and the MPS must always add up to one. 4. How do households "dissave" 5. Explain how each...
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