Question

Acro Fall 2019 Quiz 3 Chapter 22 & 23 TOTAL POINTS 20 If Logan received a $2,500 bonus and his MPS is 0.20, his consumption rises by $ A) 500; 100 B) 2,500; 200 C) 2,000; 500 D) 2,500; 20 NAME and his saving rises by S If consumption is $10,000 when income is $10,000, and consumption increases to $11,000 when income increases to $12,000, the MPS is A) 0.10. B) 0.25. C) 0.50. D) 0.90. If Zander's saving is of the form [S--150 + 0.5 Y], his consumption equals his income at an income level of A) 150. B) 225 C) 300. D) 1,500.

Answer 1

Bonus =$2500, MPS=0.20 , MPC=1-MPS =0.80

Consumption rises by 0.80*2500= 2000

Savings rise by 2500-200= 500

C) 2000,500

Consumption=$10000 when income is 10000, as income increases to 12000 consumption increases to 11000.

MPC=[(11000-10000)/(12000-10000)] = 1000/2000 = 0.50

MPS= 1-0.50=0.5(C)

Y=C+S

C=Y+150-0.5Y

C=0.5Y+150

When Y=C,

Y=0.5Y+150

0.5Y=150

Y=150/0.5 = 300(C)