EBK ECONOMICS
13th Edition
ISBN: 8220106798607
Author: Arnold
Publisher: CENGAGE L
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Question
Chapter 10, Problem 5WNG
To determine
The upward sloping of the total expenditure curve as the consumption function is upward sloping.
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Explain the Keynesian, saving-consumption relationship, and interpret consumption and saving functions on a single graph.
look at the keynesian consumption function:c=c0+(mpc)(yd).which part of it relates to autonomous consumption?which part of it relates to included consumption?define autonomous consumption and induced consumption
A decrease in autonomous consumption will
1)
shift the aggregate expenditure function downward.
2)
decrease the marginal propensity to save.
3)
shift the consumption function upward.
4)
change the slope of the consumption function.
Chapter 10 Solutions
EBK ECONOMICS
Ch. 10.1 - Prob. 1STCh. 10.1 - Prob. 2STCh. 10.1 - Prob. 3STCh. 10.2 - Prob. 1STCh. 10.2 - Prob. 2STCh. 10.2 - Prob. 3STCh. 10.3 - Prob. 1STCh. 10.3 - Prob. 2STCh. 10.3 - Prob. 3STCh. 10.4 - Prob. 1ST
Ch. 10.4 - Prob. 2STCh. 10 - Prob. 1QPCh. 10 - Prob. 2QPCh. 10 - Prob. 3QPCh. 10 - Prob. 4QPCh. 10 - Prob. 5QPCh. 10 - Prob. 6QPCh. 10 - Prob. 7QPCh. 10 - Prob. 8QPCh. 10 - Prob. 9QPCh. 10 - Prob. 10QPCh. 10 - Prob. 11QPCh. 10 - Prob. 12QPCh. 10 - Prob. 13QPCh. 10 - Prob. 14QPCh. 10 - Prob. 15QPCh. 10 - Prob. 16QPCh. 10 - Prob. 17QPCh. 10 - Prob. 18QPCh. 10 - Prob. 19QPCh. 10 - Prob. 20QPCh. 10 - Prob. 21QPCh. 10 - Prob. 22QPCh. 10 - Prob. 23QPCh. 10 - Prob. 24QPCh. 10 - Prob. 25QPCh. 10 - Prob. 1WNGCh. 10 - Prob. 2WNGCh. 10 - Prob. 3WNGCh. 10 - Prob. 4WNGCh. 10 - Prob. 5WNGCh. 10 - Prob. 6WNGCh. 10 - In the accompanying figure, explain what happens...Ch. 10 - Prob. 8WNG
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- Explain what the consumption function shows, and describe what is held constant along the consumption function. Describe what happens when firms and workers underestimate future prices in the economy. Focus your answer on what would happen to actual output as opposed to the expected potential output.arrow_forwardWhat happens in the simple Keynesian model if households expect lower income in the future and decide to save more today? Adjust the graph and answer the question. Assume that investment varies directly with aggregate income. Aggregate expenditure (in billions of dollars) 10 9 8 7 5 4 3 2 1 0 0 1 2 3 4 5 6 7 Aggregate income (in billions of dollars) 8 9 AE = AI C+1 10arrow_forwardIf U.S. consumers become more optimistic about their future income and wealth, the consumption function will shift upward. True or Falsearrow_forward
- Assume that the level of autonomous consumption in an economy equals 600, the level of planned investment = 500. Calculate the marginal propensity to consume, if the level of income equals 3,200? Provide answer to one decimal point.arrow_forwardIn the simple Keynesian consumption function C = 84 +0.83*Y^d, what is the marginal propensity to consume (MPC) equal to?arrow_forwardThe graph represents consumption (C) as a function of disposable income (DI). Assume the consumption function is linear. What is the value of the marginal propensity to consume (MPC)? Round the value of the MPC to two decimal places. MPC = Consumption $1050 900 750 600 450 300 150 0 $150 300 450 600 C = DI C 750 900 1050 Disposable incomearrow_forward
- The graph represents consumption (C) as a function of Consumption disposable income (DI). Assume the consumption function is linear. What is the value of the marginal propensity to $1050 consume (MPC)? C = DI 900 Round the value of the MPC to two decimal places. 750 600 MPC = 450 300 150 $150 300 450 600 750 900 1050 Disposable incomearrow_forwardSuppose an economy has a marginal propensity to consume of 0.66 along with $38,039 consumption taking place when disposable income is $44,238. What would disposable income be if you observe a consumption level of $45,239? Round your answer to two digits after the decimal.arrow_forwardName four differences between the Keynes and Fishers model of consumptionarrow_forward
- Explain the relationship between consumption and saving in the Keynesian model.arrow_forwardIf combine the accounting definition E= C+I and the consumption function C=co + cY to give an equation in which expenditure is a function of output, E = f (Y), and we plot this function on axes with income on the horizontal axis and expenditure on the vertical axis, a reduction in the marginal propensity to consume will lead to: a. a shift downwards in the line with unchanged slope b. a less steep line c. a shift upwards in the line with unchanged slope d. a steeper linearrow_forwardWhat is the shape of the keynesian consumption function with diagram?arrow_forward
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