Consider the following economy: Y+C+I+G Y=8000 G=2500 T=2000 C=1000+2/3(Y-T) I=1200-10,000r 1) How large is the subsistence consumption of households? 2) What is the MPC(marginal propensity to consume) in this economy? What is its economic interpretation?

Consider the following economy: Y+C+I+G Y=8000 G=2500 T=2000 C=1000+2/3(Y-T) I=1200-10,000r 1) How large is the subsistence consumption of households? 2) What is the MPC(marginal propensity to consume) in this economy? What is its economic interpretation?

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

Consider the following economy:

Y+C+I+G

Y=8000

G=2500

T=2000

C=1000+2/3(Y-T)

I=1200-10,000r

1) How large is the subsistence consumption of households?

2) What is the MPC(marginal propensity to consume) in this economy? What is its economic interpretation?

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