Answered: Interpret what it means if MPC equals…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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1. Interpret what it means if MPC equals 0.95?
2. If your MPC is 0.9 and your income falls by $200, what will be your change in spending?

3.             For each of the following determine whether there is movement along a consumption schedule (function), or a shift of the schedule. If there is a shift then indicate the direction of the shift and interpret that shift.
                   a.      Consumer’s expectations became more optimistic.
                    b.     An increase in the interest rate.
                    c.     There is a current low level of consumer durables on hand.
                    d.     Consumer incomes rise.

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