Answered: 1. Define marginal propensity to…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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1. Define marginal propensity to consume. Explain its relationship with marginal propensity to save. 2. Distinguish between MPC and APC. 3. Estimate the marginal propensity to consume in an economy in which the aggregate consumption expenditure from k400 000 to 500 000. 4.define the multiplier. Apart from income generation via the multiplier process, what other important role does investment play in an underdeveloped economy? Define inflation. With the help of diagrams bring out the distinction between cost push and demand pull inflation. Are the economic effects of inflation identical for all sections of society. Discuss giving comprehensive examples. Using the IS- LM model, discuss how equilibrium is attained in the money and products market distinctively, to arrive at the general level of equilibruim in an economy. What happens to interest rates as prices change along a given AD schedule? Explain using the IS - LM model. Explain the fixed and flexible exchange rates. What is the difference between depreciation and devaluation.

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