9 Attempts3. The consumption functionSuppose that national income in a country is $300 billion, taxes paid by households are $100 billion, household consumption is $160 billion, and themarginal propensity to consume (MPC) is 0.6.On the following graph, use the blue line (circle symbol) to plot the economy's consumption function.CONSUMPTION (Billions of dollars)500450400350300250200150100500+0Keep the Highest/250 100 150 200 250 300 350 400 450 500DISPOSABLE INCOME (Billions of dollars)$220.6 billion$178 billionSuppose now that country's national income increases to $330 billion. Assuming the amount paid in taxes is fixed at $100 billion and that MPC = 0.6,what will be the new household consumption?$148 billion$219.4 billionConsumption Function

Given Income Y=$300 billion Taxes T=$100 billion Household consumption C=160 MPC= 0.6 We have to…

3. The consumption function Suppose that national income in a country is $300 billion, taxes paid by households are $100 billion, household consumption is $160 billion, and the marginal propensity to consume (MPC) is 0.6. On the following graph, use the blue line (circle symbol) to plot the economy's consumption function. CONSUMPTION (Billions of dollars) 500 450 400 350 300 250 200 150 100 50 0 0 50 100 150 200 250 300 350 400 450 500 DISPOSABLE INCOME (Billions of dollars) Suppose now that country's national income increases to $330 billion. Assuming the amount paid in taxes is fixed at $100 billion and that MPC = 0.6, what will be the new household consumption? $220.6 billion $178 billion $148 billion Consumption Function O $219.4 billion

3. The consumption function Suppose that national income in a country is $300 billion, taxes paid by households are $100 billion, household consumption is $160 billion, and the marginal propensity to consume (MPC) is 0.6. On the following graph, use the blue line (circle symbol) to plot the economy's consumption function. CONSUMPTION (Billions of dollars) 500 450 400 350 300 250 200 150 100 50 0 0 50 100 150 200 250 300 350 400 450 500 DISPOSABLE INCOME (Billions of dollars) Suppose now that country's national income increases to $330 billion. Assuming the amount paid in taxes is fixed at $100 billion and that MPC = 0.6, what will be the new household consumption? $220.6 billion $178 billion $148 billion Consumption Function O $219.4 billion

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Attempts
3. The consumption function
Suppose that national income in a country is $300 billion, taxes paid by households are $100 billion, household consumption is $160 billion, and the
marginal propensity to consume (MPC) is 0.6.
On the following graph, use the blue line (circle symbol) to plot the economy's consumption function.
CONSUMPTION (Billions of dollars)
500
450
400
350
300
250
200
150
100
50
0
+
0
Keep the Highest/2
50 100 150 200 250 300 350 400 450 500
DISPOSABLE INCOME (Billions of dollars)
$220.6 billion
$178 billion
Suppose now that country's national income increases to $330 billion. Assuming the amount paid in taxes is fixed at $100 billion and that MPC = 0.6,
what will be the new household consumption?
$148 billion
$219.4 billion
Consumption Function

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