Economics Today: The Macro View, Student Value Edition Plus MyLab Economics with Pearson eText --Access Card Package (18th Edition)
18th Edition
ISBN: 9780134004945
Author: Roger LeRoy Miller
Publisher: PEARSON
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Question
Chapter 12, Problem 10P
To determine
The marginal propensity to consume if total planned spending declines by $200 billion in response to an increase in price level from 100 to 110 where real
Concept introduction:
MPS: Marginal propensity to save is the percentage of the additional unit of currency that is saved when the individual earns one more unit of currency. It is equal to change in saving divided by the change in income.
MPC: Marginal propensity to consume is the percentage of the additional unit of currency that is consumed when the individual earns one more unit of currency. It is equal to change in consumption divided by the change in income.
Relationship between MPS and MPC:MPS + MPC = 1, MPS = 1 − MPC, MPC = 1 - MPS
Multiplier: K = 1 / (1-MPC) = 1 / MPS, where K is multiplier
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P↑
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8
12 16 20 24 28 32 36
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Chapter 12 Solutions
Economics Today: The Macro View, Student Value Edition Plus MyLab Economics with Pearson eText --Access Card Package (18th Edition)
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