Assume that marginal propensity to consume is 0.75. autonomous consumption is 100 units (consumption function therefore is as follows: C=100+0.75 Y) . CalculateMultiplier Equilibrium output if Y=100 How much does equilibrium output change if autonomous consumption increases by 50 to 150 units (Hint: use multiplier)

Multiplier = 1 / (1 - MPC) = 1 / (1 - 0.75) = 1/0.25 = 4

Answered: Assume that marginal propensity to…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

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Assume that marginal propensity to consume is 0.75. autonomous consumption is 100 units (consumption function therefore is as follows: C=100+0.75 Y) . Calculate
Multiplier
Equilibrium output if Y=100
How much does equilibrium output change if autonomous consumption increases by 50 to 150 units (Hint: use multiplier)

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