Incorrect 50 0 0 Incorrect 50 100 150 200 250 300 350 400 450 500 Real disposable income (DI) -50 -100 -150 Incorrect 0 50 100 150 200 250 300 350 400 450 500 Real disposable income (DI) Choose the answer that best explains the relationship between the consumption function and the savings function. Shifts in the consumption function will be reflected by a change in the marginal propensity to consume, or MPC. When the consumption function shifts, the savings function shifts in the opposite direction. There is a direct relationship between shifts in the consumption and savings functions. There is not a predictable relationship between the consumption function and the savings function.
Incorrect 50 0 0 Incorrect 50 100 150 200 250 300 350 400 450 500 Real disposable income (DI) -50 -100 -150 Incorrect 0 50 100 150 200 250 300 350 400 450 500 Real disposable income (DI) Choose the answer that best explains the relationship between the consumption function and the savings function. Shifts in the consumption function will be reflected by a change in the marginal propensity to consume, or MPC. When the consumption function shifts, the savings function shifts in the opposite direction. There is a direct relationship between shifts in the consumption and savings functions. There is not a predictable relationship between the consumption function and the savings function.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Giveme full explanation otherwise i give downvote
Note:-
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Answer completely.
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Transcribed Image Text:Incorrect
50
0
0
Incorrect
50 100 150 200 250 300 350 400 450 500
Real disposable income (DI)
-50
-100
-150
Incorrect
0
50 100 150 200 250 300 350 400 450 500
Real disposable income (DI)
Choose the answer that best explains the relationship between the consumption function and the savings function.
Shifts in the consumption function will be reflected by a change in the marginal propensity to consume, or MPC.
O When the consumption function shifts, the savings function shifts in the opposite direction.
There is a direct relationship between shifts in the consumption and savings functions.
There is not a predictable relationship between the consumption function and the savings function.
Transcribed Image Text:Use the graphs to illustrate the effect of a decrease in consumer income expectations on the consumption (C) function and the
savings (S) function.
Real consumption
500
450
400
350
300-
250
200
150
100
50
0
D
50
C-DI
100 150 200 250 300 350 400 450 500
Real disposable income (DI)
Real savings
500
450
400
350
300
250
200
150
100
50
0
50
100
-150
0
50
S
100
150 200 250 300 350 400 450 500
Real disposable income (DI)
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