7. The consumption function Consider a country with the national income of $11 billion, the amount of taxes paid by households of $3 billion, and household consumption of $7 billion. Suppose that the marginal propensity to consume (MPC) is 0.75. On the following graph, use the blue line (circle symbol) to plot the economy's consumption function. Note: Select and drag the line segment from the palette to the graph. Then select a point on the line segment and drag it to its desired position. CONSUMPTION (ons of dolar) R 10 12 .. 412 14 * 18 DISPOSABLE INCOME (ons of dollars) Consumption Function

7. The consumption function Consider a country with the national income of $11 billion, the amount of taxes paid by households of $3 billion, and household consumption of $7 billion. Suppose that the marginal propensity to consume (MPC) is 0.75. On the following graph, use the blue line (circle symbol) to plot the economy's consumption function. Note: Select and drag the line segment from the palette to the graph. Then select a point on the line segment and drag it to its desired position. CONSUMPTION (ons of dolar) R 10 12 .. 412 14 * 18 DISPOSABLE INCOME (ons of dollars) Consumption Function

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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7. Question 3. The consumption function Consider the hypothetical country of Kejimkujik. Suppose that national income in Kejimkujik is $12 billion, households pay $4 billion in taxes, household consumption is equal to $6 billion, and the marginal propensity to consume (MPC) is 0.625. On the following graph, use the blue line (circle symbol) to plot the economy's consumption function. CONSUMPTION (Billions of dollars) 20 18 16 14 12 10 8 OF 6 4 2 0 6 8 10 12 14 16 DISPOSABLE INCOME (Billions of dollars). 18 20 Consumption Function
Q1:You are given the following income-expenditures model for an economy : Consumption C = 300 + .64Yd Tax (T) = $60 Government expenditure G = $100 Investment (I) = $120 From above data calculate the follows: 1. Equilibrium level of income 2. At the equilibrium level of income, what is the amount of consumption?
Economics 1. Graphing the consumption function from the MPC 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 75c. Suppose further that last year disposable income in the economy was $500 billion and consumption was $400 billion. On the following graph, use the blue line (aircle symbol) to plot this economy's consumption function based on these data. (?) 700 600 300 -100 400 500 600 700 100 200 300 DISPOSABLE INCOME (Blions of dotans) From the preceding data, you know that the level of savings in the economy last vear was s 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 S billion and savings to be S billion, CONSUMPTION (Bilions of dolars)
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Suppose you know the following facts about consumer behavior of Amy in 2019. In a year, Amy spends $10000 on basic household items regardless of how much she is earning. For every dollar of disposable income earned, Amy spends 50% on extra purchases. Amy pays taxes in the amount of $1000, and receives no transfers. Use this information to: Derive Amy’s consumption function in nominal terms. Suppose the price level index in the economy for 2019 is estimated to be P = 2. Rewrite the consumption function in real terms.
The economy is in equilibrium such that Planned Aggregate Expenditure (AE) = Aggregate Output (Y) = 1,200. We have earlier observed that when Y increased from 900 to 1,200 Aggregate Consumption (C) increased from 800 to 1000. If investments increase by 55, how much will Aggregate Income change from its current value of 1,200? 110 82.5 165 1,365 1,310
Q1:You are given the following income-expenditures model for an economy : Consumption C = 300 + .64Yd Tax (T) = $60 Government expenditure G = $100 Investment (I) = $120 From above data calculate the follows: 3. At the equilibrium level of income, what is the amount of savings? 4. Marginal Propensity of Saving (MPS)
Given the following model of an Economy as follows:- (10 marks) C = 50 + 0.7 Yd (Yd = Y-T) (Consumption & Expend) I = 100 (Investment Expend) X = 20 (Exports ) M = 10 – 0.27 (Imports) T=25 interepret the consumption Function i) Determine Equilibrium level of National Income ii) Consumption level at Equilibrium level of Income iii) Total import at equilibrium Income
Refer to Table 1. The equation for the aggregate consumption function is C = 200 + 0.3Y. C = -200 + 0.2Y. C = 200 + 0.8Y. C = 200 + 0.75Y.
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Which of the following correctly describes how a decrease in the price level affects consumption spending? Select one: a. A decrease in the price level raises real wealth, which causes consumption to increase. b. A decrease in the price level decreases the amount of money a household needs to buy goods and so raises the interest rate, which causes consumption to increase. c. A decrease in the price level increases the amount of money a household needs to buy goods and so raises the interest rate, which causes consumption to increase. d. A decrease in the price level lowers real wealth, which causes consumption to decrease.
Consider an economy where the aggregate planned expenditure (AE) components are given by: Consumption (C) = 1000 + 0.8Y Investment (I) = 200 Government Expenditure (G) = 250 Exports (Ex) = 400 Imports (Im) = 200 + 0.133Y Write the AE equation (simplified). Identify the autonomous component and the induced component. Graph the AE curve. Find and identify on the graph the equilibrium expenditure. Show on your graph the effect of an increase of 60 in government expenditure and find the new equilibrium expenditure. Find the expenditure multiplier.