country’s consumer spending is defined by the following equation: Consumer spending = 365 + 0.75 (Disposable Income) a. Draw a diagram to represent this equation. b. Assuming no government, what will the Marginal Propensity to Save (MPS) in this country. c. What will be Consumer spending if disposable income in this country is 1000? d. If suddenly this country’s wealth increases, how do you think the equation might change. Also show it in a diagram.
country’s consumer spending is defined by the following equation: Consumer spending = 365 + 0.75 (Disposable Income) a. Draw a diagram to represent this equation. b. Assuming no government, what will the Marginal Propensity to Save (MPS) in this country. c. What will be Consumer spending if disposable income in this country is 1000? d. If suddenly this country’s wealth increases, how do you think the equation might change. Also show it in a diagram.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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4. A country’s consumer spending is defined by the following equation:
Consumer spending = 365 + 0.75 (Disposable Income)
a. Draw a diagram to represent this equation.
b. Assuming no government, what will the Marginal Propensity to Save (MPS) in this country.
c. What will be Consumer spending if disposable income in this country is 1000?
d. If suddenly this country’s wealth increases, how do you think the equation might change.
Also show it in a diagram.
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