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The multiplier process depicted in the following table is based on an MPC of 0.75. Instructions: Round your responses to two decimal places. a. Recompute the first four cycles using an MPC of 0.94. Spending Change in Spending Cycles 1 2 3 4 $ MPC=0.75 during Cycle (Billions per Year) $100.00 75.00 56.25 42.18 billion Cumulative Increase in Spending (Billions per Year) $100.00 175.00 231.25 273.44 i. if the MPC = 0.75? c. What is the value of the multiplier MPC=0.94 Change in Spending during Cycle (Billions per Year) $100.00 $ $ $ b. Given that the MPC is higher, how much more consumption occurs in the first four cycles when the MPC is 0.94 compared to when the MPC is 0.75? Cumulative Increase in Spending (Billions per Year) $ 94.00 $ 88.36 $ 83.05 $ 100.00 194.00 282.36 365.41

The multiplier process depicted in the following table is based on an MPC of 0.75. Instructions: Round your responses to two decimal places. a. Recompute the first four cycles using an MPC of 0.94. Spending Change in Spending Cycles 1 2 3 4 $ MPC=0.75 during Cycle (Billions per Year) $100.00 75.00 56.25 42.18 billion Cumulative Increase in Spending (Billions per Year) $100.00 175.00 231.25 273.44 i. if the MPC = 0.75? c. What is the value of the multiplier MPC=0.94 Change in Spending during Cycle (Billions per Year) $100.00 $ $ $ b. Given that the MPC is higher, how much more consumption occurs in the first four cycles when the MPC is 0.94 compared to when the MPC is 0.75? Cumulative Increase in Spending (Billions per Year) $ 94.00 $ 88.36 $ 83.05 $ 100.00 194.00 282.36 365.41

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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The multiplier process depicted in the following table is based on an MPC of 0.75. Instructions: Round your responses to two decimal places. a. Recompute the first four cycles using an MPC of 0.94. Spending Cycles $ 6A 1 2 3 4 Change in Spending during Cycle (Billions per Year) $100.00 75.00 56.25 42.18 billion 4 MPC = 0.75 i. if the MPC = 0.75? c. What is the value of the multiplier Cumulative Increase in Spending (Billions per Year) $100.00 175.00 231.25 273.44 ii. if the MPC = 0.94? b. Given that the MPC is higher, how much more consumption occurs in the first four cycles when the MPC is 0.94 compared to when the MPC is 0.75? MPC -0.94 Change in Spending during Cycle (Billions per Year) $100.00 $ $ $ Cumulative Increase in Spending (Billions per Year) $ $ 94.00 88.36 $ 83.05 $ 100.00 194.00 282.36 365.41
Transcribed Image Text:The multiplier process depicted in the following table is based on an MPC of 0.75. Instructions: Round your responses to two decimal places. a. Recompute the first four cycles using an MPC of 0.94. Spending Cycles $ 6A 1 2 3 4 Change in Spending during Cycle (Billions per Year) $100.00 75.00 56.25 42.18 billion 4 MPC = 0.75 i. if the MPC = 0.75? c. What is the value of the multiplier Cumulative Increase in Spending (Billions per Year) $100.00 175.00 231.25 273.44 ii. if the MPC = 0.94? b. Given that the MPC is higher, how much more consumption occurs in the first four cycles when the MPC is 0.94 compared to when the MPC is 0.75? MPC -0.94 Change in Spending during Cycle (Billions per Year) $100.00 $ $ $ Cumulative Increase in Spending (Billions per Year) $ $ 94.00 88.36 $ 83.05 $ 100.00 194.00 282.36 365.41
Expert Solution
Step 1

The part of disposable income which is spent on the purchase of goods and services is known as the consumption.

Consumption function has 2 components, namely autonomous consumption and secondly induced consumption.

The consumption spending which do not depend on the disposable income is known as the autonomous consumption.

The part of consumption spending which depends on the disposable income is known as induced consumption.

 

 

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