3. Consumption function and non-income determinants The following graphs show an economy's initial position at point B along its consumption function C. Suppose disposable income suddenly and unexpectedly decreases. On the graph, shift either the C curve or the initial point on the C curve to show the impact of a fall in disposable income. Real Consumption Spending (Bitions of dollars) Disposable Income (Ballions of dollars) 1 COO с D Now suppose that there is an increase in the interest rate households are paid on money they save. On the following graph, shift either the C curve or the initial point on the C curve to show the impact of an increase in the intere

3. Consumption function and non-income determinants The following graphs show an economy's initial position at point B along its consumption function C. Suppose disposable income suddenly and unexpectedly decreases. On the graph, shift either the C curve or the initial point on the C curve to show the impact of a fall in disposable income. Real Consumption Spending (Bitions of dollars) Disposable Income (Ballions of dollars) 1 COO с D Now suppose that there is an increase in the interest rate households are paid on money they save. On the following graph, shift either the C curve or the initial point on the C curve to show the impact of an increase in the intere

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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.Refer to the information provided in Figure 8.9 below to answer the questions that follow AE 225 200 175 150 45 100 200 300 Aggregate output ($ millions) Figure 8.9 Refer to Figure 8.9. How will equilibrium aggregate expenditure and equilibrium aggregate output change as a result ?of a decrease in investment by $20 million AE line shifts down, increasing equilibrium output and equilibrium expenditure a O AE line shifts up, increasing equilibrium output and equilibrium expenditure b O AE line shifts down, decreasing equilibrium output and equilibrium expenditure .c O AE line shifts down, increasing equilibrium output and decreasing equilibrium expenditure .d O Aggregate expenditures ($ millions)
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Question 19 The expenditure line O is steeper than the 45-degree line. O slopes upward because consumption depends positively on income. O slopes upward because the MPC is less than 1. slopes upward because consumption and investment depend positively on income. O shows the relationship between consumption spending and income. D Question 20 Between December 2007 and June 2009, the United States economy was in recession and millions of jobs were lost. the United States economy moved upward and millions of jobs were created. the United States economy grew, but not many jobs were created. the United States economy moved downward, but still many jobs were created. the United States economy remained stationary.
If Michelle's income is reduced to zero after she loses her job, her consumption will be and her saving will be O greater than zero; greater than zero O less than zero; greater than zero O greater than zero; less than zero O less than zero; less than zero
Economics
QUESTION 21 What is the marginal propensity to consume? a. The ratio of the change in consumption to the change in national income O b. The proportion of national income that goes on consumption O c. The additional spending by a consumer when the price of a good falls O d. The additional revenue received by a firm when it attracts a new customer
16. Find consumption expenditure from the following National Income =Rs. 5000 Autonomous Consumption = Rs. 1000 Marginal Propensity to Consume = 0.8 %3D
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Question 21 Households change their spending by $10 billion due to a decrease in net wealth. The country's marginal propensity to consume is 0.8. What impact will this have on real GDP? Consumption spending will increase by $10 billion Investment spending will decrease by $50 billion Consumption spending will increase by $50 billion Consumption spending will decrease by $50 billion O Consumption spending will decrease by $10 billion O ooo O
Suppose that an economy consists of only two individuals. Trevor has $1310 available to spend on goods. He decides to purchase $130 worth of produce from Krista in the current year. No other economic activity takes place during the current year. Using this information, answer the questions. For the current year, what is the economy's income? For the current year, what is the economy's expenditure? In an economy, how are income and expenditure related? O Income is greater than expenditure 24 MacBook Air In an economy, how are income and expenditure related? Income is greater than expenditure. O They are equal. Income is less than expenditure. They are unrelated.
1. The positive relationship between consumption expenditure and disposable income can be shown by a positive slope of consumption curve. Answer: Reason: O Accessibility: Investigate hp
23. In an economy income increases by 10,000 as a result of a rise in investment expenditure by 1,000. Calculate: (a) Investment Multiplier (b) Marginal Propensity to Consume