3. The consumption functionSuppose that national income in a country is $30 billion, taxes paid by households is $10 billion, household consumption is $18 billion, and themarginal propensity to consume (MPC) is 0.8.On the following graph, use the blue line (circle symbol) to plot the economy's consumption function.CONSUMPTION (Billions of dollars)504540353025201510500 5+++10 15 20 25 30 35 40DISPOSABLE INCOME (Billions of dollars)O $25.2 billion$26.8 billion$24.4 billion450.8,Suppose now that country's national income increases to $34 billion. Assuming the amount paid in taxes is fixed at $10 billion and that MPC =what will be the new household consumption?$21.2 billion50Consumption Function(?)

3. The consumption function Suppose that national income in a country is $30 billion, taxes paid by households is $10 billion, household consumption is $18 billion, and th marginal propensity to consume (MPC) is 0.8. On the following graph, use the blue line (circle symbol) to plot the economy's consumption function. ?

3. The consumption function Suppose that national income in a country is $30 billion, taxes paid by households is $10 billion, household consumption is $18 billion, and th marginal propensity to consume (MPC) is 0.8. On the following graph, use the blue line (circle symbol) to plot the economy's consumption function. ?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

3
Say true or false
1. Use the following table with information on the consumption behavior of the people of Gotham to answer the following questions: Disposable Income Consumption $300 $440 $0 $200 a. What is the value of 'a' or autonomous consumption in this economy? b. What is the value of 'b’ or the Marginal Propensity to Consume (MPC) in this economy? Interpret the meaning of this MPC value in one sentence.
Is 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 (Bilions of dollars) 0 Disposable Income (Billions of dollars) C 16 с 0 B 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 interest
Suppose that an economy consists of only two individuals. Trevor has $1150 available to spend on goods. He decides to purchase $210 worth of produce from Juanita in the current quarter. No other economic activity takes place during the current quarter. Using this information, answer the questions. For the current quarter, what is the economy's income? $ For the current quarter, what is the economy's expenditure? In an economy, how are income and expenditure related? Income is greater than expenditure. O Income is less than expenditure. They are unrelated. O They are equal.
Consider a hypothetical economy in which the marginal propensity to consume (MPC) is 0.75. That is, if disposable income increases by $1, consumption increases by 75¢. Suppose further that last year disposable income in the economy was $500 billion and consumption was $450 billion. On the following graph, use the blue line (circle symbol) to plot this economy's consumption function based on these data. Fill in the blanks From the preceding data, you know that the level of saving in the economy last year was ____________billion and the marginal propensity to save in this economy is ___________. Suppose that this year, disposable income is projected to be $700 billion. Based on your analysis, you would expect consumption to be _______ billion and saving to be ________ billion.
The slope of the line between points a and b is 4 .25 -4 -.25
Give typing answer with explanation and conclusion
B) In a closed economy, the functions for consumption, investment, government expenditure and taxation are given as below (in RM million). Consumption function : C=500 + 0.75 Yd Investment function | = 800 Government expenditure :G = 400 Тахation :T= 200 + 0.2 Y i. Find the equilibrium level of national income for the economy stated above. ii. Draw a graph to show the equilibrium of national income by using AD=AS approach. Find the total value of taxation when the national income is at equilibrium. iii.
3. If the consumption function is C= $200 billion + 0.9Y, a) How much do consumers spend with income of $3 trillion? b) How much do they save?
ADVANCED ANALYSIS Suppose that the linear equation for consumption in a hypothetical economy is C = 60 + 0.75Y. Also suppose that income (Y) is $600. Determine the following values: Instructions: For parts a, b, d, and f, round your answers to 2 decimal places if necessary. For parts c and e, enter your answers as a whole number. a. MPC = b. MPS = c. Level of consumption = $ d. APC = e. Level of saving = $ f. APS =
2. Suppose you are economist and have the following data: Consumption; Income; 75 253 85 185 98 212 108 180 118 185 You want to investigate the effect of income on consumption. a)Write and estimate your model b)interpret the results