If the consumption function is C = $800 billion + 0.8Y, a. what is the MPC? __ b. how large is autonomous consumption? $ __ billion c. how much do consumers spend with incomes of $4 trillion?

If the consumption function is C = $800 billion + 0.8Y, a. what is the MPC? b. how large is autonomous consumption? $ billion c. how much do consumers spend with incomes of $4 trillion?

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter10: Keynesian Macroeconomics And Economic Instability: A Critique Of The Self Regulating Economy

Section: Chapter Questions

Problem 10QP

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Question

If the consumption function is C = $800 billion + 0.8Y,

a. what is the MPC?

b. how large is autonomous consumption?

$ __ billion

c. how much do consumers spend with incomes of $4 trillion?

$ __billion

d. how much do they save?

$ __ billion

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Step 3: Calculation of autonomous consumption:

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Step 4: Calculation of consumption:

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Step 5: Calculation of saving;

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