As shown in Exhibit 2, the marginal propensity to consume (MPC) is: Group of answer choices0.33.0.50.0.67.0.75. Exhibit 2 Aggregate expenditures function87Real6conяппрtionand investmentexpenditures(trilli ons ofdollars peryear)2145"0 1 2 3 4 5 6 7 8 9Real disposable income(trilli ons of dollars per year)4)3.

Marginal propensity to consume (MPC) refers to the value of additional consumption due to increase…

Answered: As shown in Exhibit 2, the marginal…

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As shown in Exhibit 2, the marginal propensity to consume (MPC) is: Group of answer choices 0.33. 0.50. 0.67. 0.75.

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

As shown in Exhibit 2, the marginal propensity to consume (MPC) is:

Group of answer choices

0.33.

0.50.

0.67.

0.75.

Exhibit 2 Aggregate expenditures function
8
7
Real
6
conяппрtion
and investment
expenditures
(trilli ons of
dollars per
year)
2
1
45"
0 1 2 3 4 5 6 7 8 9
Real disposable income
(trilli ons of dollars per year)
4)
3.

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Consider the impact of thriftiness in the Keynesian Cross Model. Suppose the consumption function is C=C¯+c(Y−T¯) where C¯ is called autonomous consumption and cc is the marginal propensity to consume. a) What happens to equilibrium income when society becomes more thrifty (i.e., a decline in C¯) b) Your answer to (a) is called the Paradox of Thrift. Explain why consuming less (and saving more) is not a good thing in this model. (Hint: a decrease in consumption wouldn’t be so bad in our classical model of Chapter 3 because we assumed national savings equaled investment in the long run.)
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Consider an economy that is characterized by the following equations: C= 400 + 0.5 Yd I = 700 - 4000i + 0.1y G= 200 T= 200 (M/P)d - = 0.75Y - 7500€ (MP)== 600 What is the equilibrium consumption (C)?