Homework Answers
Ans
As can be seen in figure mpc is same at origin but less on C1
than on C2. C2 was initial consumption function but due to fall in
mpc it shifted to C1. Note here we have using straight line
consumption function to simplify things
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8. Assume that the size of the MPC falls. Conos mohon funchoat happens to the consumption...
If the MPC in an economy equals 0.8, and disposable income falls by $100, consumption spending...
If the MPC in an economy equals 0.8, and disposable income falls by $100, consumption spending will fall by _____. A. $8.00 B. $0.80 C. $80 D. $20 E. $500
QUESTION 12 If the MPC is 0.75, then the multiplier is: QUESTION 13 and autonomous consumption If the consumption f...
QUESTION 12 If the MPC is 0.75, then the multiplier is: QUESTION 13 and autonomous consumption If the consumption function is: C -0.68(Disposable income) + 400, the MPC -
QUESTION 13 and autonomous If the consumption function is: C = 0.68(Disposable Income) + 400, the MPC- consumption...
QUESTION 13 and autonomous If the consumption function is: C = 0.68(Disposable Income) + 400, the MPC- consumption -
Assume that, without taxes, the consumption schedule of an economy is as follows: a. What is...
Assume that, without taxes, the consumption schedule of an
economy is as follows:
a. What is the value of the MPC?
_______
.Graph the resulting consumption
schedule.
Instructions: Use the tool provided 'CE' to draw
the consumption schedule. Plot 8 points total.
b. Assume now that a lump-sum tax is imposed such that the
government collects $10 billion in taxes at all levels of GDP. Add
the after-tax consumption to the table below.
Compare the MPC and the
multiplier with...
Assume that the MPC is 0.85 and investment spending rises by $100 million. How much consumption...
Assume that the MPC is 0.85 and investment spending rises by $100 million. How much consumption spending will this generate in the second round of spending? a. $100 million b. $85 million c. $118 million d. $15 million e. $185 million
Using a graph explain the Keynesian consumption function showing how the MPC and the APC in...
Using a graph explain the Keynesian consumption function showing how the MPC and the APC in the function are affected by an increase in income
Keynesian Consumption Function (billions of dollars per year) Real disposable income Consumption Saving MPC MPS $100...
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...
An decrease in the Marginal Propensity to Consume (MPC) ________ the consumption function. flattens steepens does...
An decrease in the Marginal Propensity to Consume (MPC) ________ the consumption function. flattens steepens does not affect
Assume that the MPC is 0.85 and investment spending rises by $100 million. How much consumption...
Assume that the MPC is 0.85 and investment spending rises by $100 million. How much consumption spending will this generate in the second round of spending? O a. $100 million O b. $85 million O c. $185 million O d. $118 million oo e. 515 million
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...
QUESTION 12 If the MPC is 0.75, then the multiplier is: QUESTION 13 and autonomous consumption If the consumption function is: C -0.68(Disposable income) + 400, the MPC -
QUESTION 13 and autonomous If the consumption function is: C = 0.68(Disposable Income) + 400, the MPC- consumption -
Assume that, without taxes, the consumption schedule of an
economy is as follows:
a. What is the value of the MPC?
_______
.Graph the resulting consumption
schedule.
Instructions: Use the tool provided 'CE' to draw
the consumption schedule. Plot 8 points total.
b. Assume now that a lump-sum tax is imposed such that the
government collects $10 billion in taxes at all levels of GDP. Add
the after-tax consumption to the table below.
Compare the MPC and the
multiplier with...
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...
Assume that the MPC is 0.85 and investment spending rises by $100 million. How much consumption spending will this generate in the second round of spending? O a. $100 million O b. $85 million O c. $185 million O d. $118 million oo e. 515 million
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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