Exploring Economics
8th Edition
ISBN: 9781544336329
Author: Robert L. Sexton
Publisher: SAGE Publications, Inc
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Question
Chapter 23, Problem 4P
To determine
To explain:
The change in autonomous consumption if there is a fall in the household debt and rise in the interest rate over the same time period.
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How can autonomous consumption be greater than zero when disposable income equals zero?
What is consumption function? Differentiate between Keynesian consumption theory and Permanent income theory of consumption.
What is the consumption function? What is the marginal propensity to consume? What does an upward-sloping consumption function mean?
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- Find the value of consumption when autonomous consumption is 300 the value of MPC is 0.9 and income is 2000arrow_forwardCreate a diagram to explain the three main characteristics of the consumption function.arrow_forwardThe following are exogenous (not directly affected by income): G = 11 I = 4 X = M = 0 The consumption function is: C = k + cY, where k = 3, c = 0.8 What is the equilibrium level of GDP? What is the multiplier?arrow_forward
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- Explain the Keynesian, saving-consumption relationship, and interpret consumption and saving functions on a single graph.arrow_forward© Macmillan Learning The 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. Consumption $1050 900 MPC = 750 600 450 300 150 C=DI C 0 $150 300 450 600 750 900 1050 Disposable incomearrow_forwardAssume taxes are zero and an economy has a consumption function of C = 0.89 (Yd) + $299.19. How much consumption takes place if disposable income is equal to 4,848.76? Round your answer to two digits after the decimal.arrow_forward
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