TOPIC: Consumption and Saving 3. Consumption and savingSuppose Cho gets a sales bonus at her place of work that gives her an extra $700 of disposable income. She chooses to spend $560 and save theremaining $140.From this, you can tell that Cho's marginal propensity to consume (MPC) isand her marginal propensity to save (MPS) is0.80,0.80,Mathematically, it must always be true that:0.56,0.56,0.20Consumption=Disposable income-Saving,Saving-Disposable income,Disposable income+Saving0.20Or 0.14Or 0.14Therefore, it must also be true that:MPC1-MPS,1+MPS,ORMOS

The marginal propensity to consume (MPC) measures the change in consumption resulting from a change…

Answered: 3. Consumption and saving Suppose Cho…

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter9: Aggregate Expenditures

Section: Chapter Questions

Problem 10E

See similar textbooks

Similar questions

Assume in a simple economy that the level of saving is –500 whenaggregate output equals zero and that the marginal propensity tosave is 0.2. Derive the saving function and the consumption func-tion, and draw a graph showing these functions. At what level ofaggregate output does the consumption curve cross the 45° line?Explain your answer and show this on the graph.
When the consumption function lies above the 45-degree line, households * O Spend on consumption an increasing percentage of any increase in income O Spend on consumption a decreasing percentage of any increase in income O Are dissaving O Save all of any increase in income
assume you are given a $100 raise, and decide to save $20 of that money. also assume that if you make zero income in a year, you will still spend $7000. a.) what is your consumption function? b.) if you earn $20000 in a year how much will you spend? c.) will you be able to save while earning the above income?
One of these four answers best explains the effect of disposable income on consumption. Which one? O Disposable income does not determine consumption. O Disposable income is the most powerful determinant of income and determines how much an individual consumes. O When an individual has more disposable income, he or she is likely to consume less. O Disposable income is an important determinant of expected future income.
Aina receives a tax refund of P800. He spends P600 and saves P200. Aina's marginal propensity to consume is: a. 0.6 b. 0.75 c. 0.25 d. 0.20
Figure 7.1 C b. 100 In Figure 7.1, all of the following is true except: An additional dollar of income always induces some additional consumption. O There is some level of consumption that is independent of income. O The marginal inclination to consume is greater than zero. O At zero income there is zero consumption.
If a household’s income falls from R20 000 to R17 000 and its consumption falls from R18 000 to R15 000, thenits:a) marginal propensity to consume is –0,67.b) marginal propensity to consume is 0,88.c) marginal propensity to consume is 0,20.d) marginal propensity to save is zero.e) marginal propensity to save is 0,12.
Q.1.9 If a household’s income falls from R12 000 to R10 000, and its consumption fallsfrom R9 500 to R8 000, then:(2)(1) The marginal propensity to consume is ‐0.8. (2) The marginal propensity to consume is 0.75. (3) The marginal propensity to consume is 0.2. (4) The marginal propensity to save is 0.15.
If average income goes from $30,000 to $33,000 and consumption increases from $29,000 to $31,000, the marginal propensity to consume is Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. 67 b 1.5 1.06 0.96
please explain this dynamic multiplier graph that given
You are an economic advisor to the government. Discuss your opinion . a) How COVID-19 pandemic will affect the consumption behavior as well as the investment done by the firms and household for the next two years? b) What are the actions or policies that the government can implement to face this situation? please answers with analysis and --graph (if possible)
6. Given the savings function S = (3Y2 +2Y)/ ( Y-1) a) Write the consumption function. b) Find the equilibrium level of income, if the consumption is 100. Please answer both subparts. I will really upvote

SEE MORE QUESTIONS

Recommended textbooks for you

Economics:

Economics

ISBN:

9781285859460

Author:

BOYES, William

Publisher:

Cengage Learning

Exploring Economics

Economics

ISBN:

9781544336329

Author:

Robert L. Sexton

Publisher:

SAGE Publications, Inc

MACROECONOMICS

Economics

ISBN:

9781337794985

Author:

Baumol

Publisher:

CENGAGE L

Economics:

Economics

ISBN:

9781285859460

Author:

BOYES, William

Publisher:

Cengage Learning

Exploring Economics

Economics

ISBN:

9781544336329

Author:

Robert L. Sexton

Publisher:

SAGE Publications, Inc

MACROECONOMICS

Economics

ISBN:

9781337794985

Author:

Baumol

Publisher:

CENGAGE L

Macroeconomics: Principles and Policy (MindTap Co…

Economics

ISBN:

9781305280601

Author:

William J. Baumol, Alan S. Blinder

Publisher:

Cengage Learning

SEE MORE TEXTBOOKS