Homework Answers
Ans. The average propensity to consume at income level K is given by KM divided by KN.
The average propensity to consume is computed by dividing the consumption by income. Here in this diagram, it is given by KM divided by KN.
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M .L Consumption 45 Income The graph shows the relationship between consumption and income. Which of...
The following table shows the relationship between income and consumption in an economy. Income (Y) ($...
The following table shows the relationship between income and consumption in an economy. Income (Y) ($ billion) Consumption (C) ($ billion) 0 5 10 11 20 17 30 23 40 29 50 35 60 41 70 47 80 53 90 59 100 65 Assume Investment (I) is $5 billion, government purchases (G) are $4 billion, and net exports (X) are $2 billion. Assume net taxes (T) equal zero. a. What is the numerical value of the marginal propensity to...
Aggregate expenditure is total value added in the economy income of households, businesses, governments, and foreigners....
Aggregate expenditure is total value added in the economy income of households, businesses, governments, and foreigners. revenue from the sale of goods and services. spending on final goods and services. The MPC can be defined as the change in consumption divided by the change in income. change in income divided by the change in consumption. ratio of income to saving. ratio of saving to consumption. The relationship between the MPS and the MPC is such that MPC - MPS =...
Economists refer to the simple relationship between consumption and disposable income as: autonomous consumption. the marginal...
Economists refer to the simple relationship between consumption and disposable income as: autonomous consumption. the marginal propensity to consume. the absolute disposable income hypothesis. disposable income. the consumption function.
Consumption expenditure (billions of 2009 dollars) 350- The graph shows the consumption function. What is the...
Consumption expenditure (billions of 2009 dollars) 350- The graph shows the consumption function. What is the marginal propensity to consume, and what is autonomous consumption? 300 CF The marginal propensity to consume is 250- >>> Answer to 2 decimal places. 200- Autonomous consumption is $billion. 150 100 50- 0- 0 100 200 300 400 Disposable income (billions of 2009 dollars)
available until you sign in again A high rate of inflation is likely to cause a...
available until you sign in again A high rate of inflation is likely to cause a Multiple Cholce low rate of growth of nominal GDP decrease in nominal wages. high nominal interest rate. low nominal interest rate. Next> Prev 45 of 50 available until you sign in again In a private closed economy, national income is $4.5 trillion and saving equals $6.4 billion. Based on these data, the marginal propensity to consume Multiple Choice is greater than the marginal propensity...
S oul vices GED available until you sign in again A firm invests in a new...
S oul vices GED available until you sign in again A firm invests in a new machine that costs $5,000 a year but which is expected to produce an increase in total revenue of $5,200 a year. The current real rate of interest is 7 percent. The firm should Multiple Choice not undertake the investment, because the expected rate of return of 6 percent is less than the real rate of interest. O not undertake the investment, because the expected...
Macroeconomics Assignment 2 1. The table shows disposable income and consumption expenditure in an economy. Use...
Macroeconomics Assignment 2 1. The table shows disposable income and consumption expenditure in an economy. Use the table to work Problems A and B. Disposable Consumption income expenditure (Billions of dollars) 800 1,000 A. Calculate saving at each level of disposable income. Over what range of disposable income does consumption expenditure exceed disposable income? Calculate autonomous consumption expenditure. B. Calculate the marginal propensity to consume. At what level of disposable income will savings be zero? If expected future income increases,...
Suppose the Consumption function for a particular economic system is: C = 150,000 +.95Y 1. What...
Suppose the Consumption function for a particular economic system is: C = 150,000 +.95Y 1. What is the Marginal Propensity to Consume for this economy? If aggregate income increases by $27 billion, what will happen to aggregate consumption spending? 2. At what level of Yis saving equal to zero? (That is, at what level of Y does the Consumption function intersect the 45 degree line?) 3. What is the Saving function for this economy? What is the Marginal Propensity to...
5. Graphing the consumption function from the MPC Consider a hypothetical economy in which the marginal...
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...
Consumption expenditure (billions of 2009 dollars) 350- The graph shows the consumption function. What is the marginal propensity to consume, and what is autonomous consumption? 300 CF The marginal propensity to consume is 250- >>> Answer to 2 decimal places. 200- Autonomous consumption is $billion. 150 100 50- 0- 0 100 200 300 400 Disposable income (billions of 2009 dollars)
available until you sign in again A high rate of inflation is likely to cause a Multiple Cholce low rate of growth of nominal GDP decrease in nominal wages. high nominal interest rate. low nominal interest rate. Next> Prev 45 of 50 available until you sign in again In a private closed economy, national income is $4.5 trillion and saving equals $6.4 billion. Based on these data, the marginal propensity to consume Multiple Choice is greater than the marginal propensity...
S oul vices GED available until you sign in again A firm invests in a new machine that costs $5,000 a year but which is expected to produce an increase in total revenue of $5,200 a year. The current real rate of interest is 7 percent. The firm should Multiple Choice not undertake the investment, because the expected rate of return of 6 percent is less than the real rate of interest. O not undertake the investment, because the expected...
Macroeconomics Assignment 2 1. The table shows disposable income and consumption expenditure in an economy. Use the table to work Problems A and B. Disposable Consumption income expenditure (Billions of dollars) 800 1,000 A. Calculate saving at each level of disposable income. Over what range of disposable income does consumption expenditure exceed disposable income? Calculate autonomous consumption expenditure. B. Calculate the marginal propensity to consume. At what level of disposable income will savings be zero? If expected future income increases,...
Suppose the Consumption function for a particular economic system is: C = 150,000 +.95Y 1. What is the Marginal Propensity to Consume for this economy? If aggregate income increases by $27 billion, what will happen to aggregate consumption spending? 2. At what level of Yis saving equal to zero? (That is, at what level of Y does the Consumption function intersect the 45 degree line?) 3. What is the Saving function for this economy? What is the Marginal Propensity to...
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...
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