(a) To explain: The reason for equality between slope of the consumption function with MPC.

Question

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Answer 1

Question

Chapter 27A, Problem 1QFR

To determine

(a)

To explain:

The reason for equality between slope of the consumption function with MPC.

Expert Solution

Answer to Problem 1QFR

MPC is the ratio of an overall increase in pay spent by a customer on the produced goods andservices,as compared to saving it. It matches with the consumption function'slope.

Explanation of Solution

MPC is a key concept of Keynesian macroeconomic theory.It is enumerated through the division ofthe change arisen in consumption level by the change arisen in income level. When the changesin income are plotted on the X axis and changes in consumption are plotted on the Y axis, then the MPC can be depicted which is sloped line of the original consumption function.

MPC is also called consumption function that means the consumption function's slope is always equal to MPC. This is because consumption function slopes positively when MPC value is positive. The MPC value is lower than unity as the increasing rate of consumption is very low than the increasing rate of income. When consumption function becomes a straight one, MPC value remains constant at every income level.So,it can be finished that the slope between any two points on consumption function delivers the MPC value.

Economics Concept Introduction

Consumption function:

Consumption function is the mathematical expression of the functional connection between complete level of consumption and an economy's gross national income.This function's slope matches MPC.

To determine

(b)

To explain:

The equality between slope of the aggregate expenditure (AE) function with MPC.

Expert Solution

Answer to Problem 1QFR

Along with some other aggregate marginal expenditure, MPC primarily makes the base of the AE curve's slope. AE grows at the same speed with that of MPC in initial level.

Explanation of Solution

The MPC as the slope of the consumption function line tends to form the basis of the aggregate expenditures line's slope. This slope is built up with the MPI,marginal propensity for government purchases(MPG) andmarginal propensity to import(MPM)also. The aggregate line possesses positive slope reflecting induced expenditures. These expenditures are aggregate expenditures dependent on income or production level. If the aggregate economy can generate huge income, then all the four macroeconomic sectors will be induced to incur more expenditure and vice versa. Since, MPC is the ratio of changed consumption with changed income so it determines the slope of the AE. Hence,it can be saidthat AE slope is equal to MPC.

Economics Concept Introduction

Aggregate expenditure:

Aggregate expenditure (AE) is summation of all the final produced outputs' present value within the economy over a specified term. These include the expenditures made on consumer goods, planned investment, government expenditure and exports import gap. Slope of this line always matches MPC.

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Answer 2

Question

Chapter 27A, Problem 1QFR

To determine

(a)

To explain:

The reason for equality between slope of the consumption function with MPC.

Expert Solution

Answer to Problem 1QFR

MPC is the ratio of an overall increase in pay spent by a customer on the produced goods andservices,as compared to saving it. It matches with the consumption function'slope.

Explanation of Solution

MPC is a key concept of Keynesian macroeconomic theory.It is enumerated through the division ofthe change arisen in consumption level by the change arisen in income level. When the changesin income are plotted on the X axis and changes in consumption are plotted on the Y axis, then the MPC can be depicted which is sloped line of the original consumption function.

MPC is also called consumption function that means the consumption function's slope is always equal to MPC. This is because consumption function slopes positively when MPC value is positive. The MPC value is lower than unity as the increasing rate of consumption is very low than the increasing rate of income. When consumption function becomes a straight one, MPC value remains constant at every income level.So,it can be finished that the slope between any two points on consumption function delivers the MPC value.

Economics Concept Introduction

Consumption function:

Consumption function is the mathematical expression of the functional connection between complete level of consumption and an economy's gross national income.This function's slope matches MPC.

To determine

(b)

To explain:

The equality between slope of the aggregate expenditure (AE) function with MPC.

Expert Solution

Answer to Problem 1QFR

Along with some other aggregate marginal expenditure, MPC primarily makes the base of the AE curve's slope. AE grows at the same speed with that of MPC in initial level.

Explanation of Solution

The MPC as the slope of the consumption function line tends to form the basis of the aggregate expenditures line's slope. This slope is built up with the MPI,marginal propensity for government purchases(MPG) andmarginal propensity to import(MPM)also. The aggregate line possesses positive slope reflecting induced expenditures. These expenditures are aggregate expenditures dependent on income or production level. If the aggregate economy can generate huge income, then all the four macroeconomic sectors will be induced to incur more expenditure and vice versa. Since, MPC is the ratio of changed consumption with changed income so it determines the slope of the AE. Hence,it can be saidthat AE slope is equal to MPC.

Economics Concept Introduction

Aggregate expenditure:

Aggregate expenditure (AE) is summation of all the final produced outputs' present value within the economy over a specified term. These include the expenditures made on consumer goods, planned investment, government expenditure and exports import gap. Slope of this line always matches MPC.

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Answer 3

Question

Chapter 27A, Problem 1QFR

To determine

(a)

To explain:

The reason for equality between slope of the consumption function with MPC.

Expert Solution

Answer to Problem 1QFR

MPC is the ratio of an overall increase in pay spent by a customer on the produced goods andservices,as compared to saving it. It matches with the consumption function'slope.

Explanation of Solution

MPC is a key concept of Keynesian macroeconomic theory.It is enumerated through the division ofthe change arisen in consumption level by the change arisen in income level. When the changesin income are plotted on the X axis and changes in consumption are plotted on the Y axis, then the MPC can be depicted which is sloped line of the original consumption function.

MPC is also called consumption function that means the consumption function's slope is always equal to MPC. This is because consumption function slopes positively when MPC value is positive. The MPC value is lower than unity as the increasing rate of consumption is very low than the increasing rate of income. When consumption function becomes a straight one, MPC value remains constant at every income level.So,it can be finished that the slope between any two points on consumption function delivers the MPC value.

Economics Concept Introduction

Consumption function:

Consumption function is the mathematical expression of the functional connection between complete level of consumption and an economy's gross national income.This function's slope matches MPC.

To determine

(b)

To explain:

The equality between slope of the aggregate expenditure (AE) function with MPC.

Expert Solution

Answer to Problem 1QFR

Along with some other aggregate marginal expenditure, MPC primarily makes the base of the AE curve's slope. AE grows at the same speed with that of MPC in initial level.

Explanation of Solution

The MPC as the slope of the consumption function line tends to form the basis of the aggregate expenditures line's slope. This slope is built up with the MPI,marginal propensity for government purchases(MPG) andmarginal propensity to import(MPM)also. The aggregate line possesses positive slope reflecting induced expenditures. These expenditures are aggregate expenditures dependent on income or production level. If the aggregate economy can generate huge income, then all the four macroeconomic sectors will be induced to incur more expenditure and vice versa. Since, MPC is the ratio of changed consumption with changed income so it determines the slope of the AE. Hence,it can be saidthat AE slope is equal to MPC.

Economics Concept Introduction

Aggregate expenditure:

Aggregate expenditure (AE) is summation of all the final produced outputs' present value within the economy over a specified term. These include the expenditures made on consumer goods, planned investment, government expenditure and exports import gap. Slope of this line always matches MPC.

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Answer 4

Question

Chapter 27A, Problem 1QFR

To determine

(a)

To explain:

The reason for equality between slope of the consumption function with MPC.

Expert Solution

Answer to Problem 1QFR

MPC is the ratio of an overall increase in pay spent by a customer on the produced goods andservices,as compared to saving it. It matches with the consumption function'slope.

Explanation of Solution

MPC is a key concept of Keynesian macroeconomic theory.It is enumerated through the division ofthe change arisen in consumption level by the change arisen in income level. When the changesin income are plotted on the X axis and changes in consumption are plotted on the Y axis, then the MPC can be depicted which is sloped line of the original consumption function.

MPC is also called consumption function that means the consumption function's slope is always equal to MPC. This is because consumption function slopes positively when MPC value is positive. The MPC value is lower than unity as the increasing rate of consumption is very low than the increasing rate of income. When consumption function becomes a straight one, MPC value remains constant at every income level.So,it can be finished that the slope between any two points on consumption function delivers the MPC value.

Economics Concept Introduction

Consumption function:

Consumption function is the mathematical expression of the functional connection between complete level of consumption and an economy's gross national income.This function's slope matches MPC.

To determine

(b)

To explain:

The equality between slope of the aggregate expenditure (AE) function with MPC.

Expert Solution

Answer to Problem 1QFR

Along with some other aggregate marginal expenditure, MPC primarily makes the base of the AE curve's slope. AE grows at the same speed with that of MPC in initial level.

Explanation of Solution

The MPC as the slope of the consumption function line tends to form the basis of the aggregate expenditures line's slope. This slope is built up with the MPI,marginal propensity for government purchases(MPG) andmarginal propensity to import(MPM)also. The aggregate line possesses positive slope reflecting induced expenditures. These expenditures are aggregate expenditures dependent on income or production level. If the aggregate economy can generate huge income, then all the four macroeconomic sectors will be induced to incur more expenditure and vice versa. Since, MPC is the ratio of changed consumption with changed income so it determines the slope of the AE. Hence,it can be saidthat AE slope is equal to MPC.

Economics Concept Introduction

Aggregate expenditure:

Aggregate expenditure (AE) is summation of all the final produced outputs' present value within the economy over a specified term. These include the expenditures made on consumer goods, planned investment, government expenditure and exports import gap. Slope of this line always matches MPC.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 27A, Problem 1QFR

To determine

(a)

To explain:

The reason for equality between slope of the consumption function with MPC.

Expert Solution

Answer to Problem 1QFR

MPC is the ratio of an overall increase in pay spent by a customer on the produced goods andservices,as compared to saving it. It matches with the consumption function'slope.

Explanation of Solution

MPC is a key concept of Keynesian macroeconomic theory.It is enumerated through the division ofthe change arisen in consumption level by the change arisen in income level. When the changesin income are plotted on the X axis and changes in consumption are plotted on the Y axis, then the MPC can be depicted which is sloped line of the original consumption function.

MPC is also called consumption function that means the consumption function's slope is always equal to MPC. This is because consumption function slopes positively when MPC value is positive. The MPC value is lower than unity as the increasing rate of consumption is very low than the increasing rate of income. When consumption function becomes a straight one, MPC value remains constant at every income level.So,it can be finished that the slope between any two points on consumption function delivers the MPC value.

Economics Concept Introduction

Consumption function:

Consumption function is the mathematical expression of the functional connection between complete level of consumption and an economy's gross national income.This function's slope matches MPC.

To determine

(b)

To explain:

The equality between slope of the aggregate expenditure (AE) function with MPC.

Expert Solution

Answer to Problem 1QFR

Along with some other aggregate marginal expenditure, MPC primarily makes the base of the AE curve's slope. AE grows at the same speed with that of MPC in initial level.

Explanation of Solution

The MPC as the slope of the consumption function line tends to form the basis of the aggregate expenditures line's slope. This slope is built up with the MPI,marginal propensity for government purchases(MPG) andmarginal propensity to import(MPM)also. The aggregate line possesses positive slope reflecting induced expenditures. These expenditures are aggregate expenditures dependent on income or production level. If the aggregate economy can generate huge income, then all the four macroeconomic sectors will be induced to incur more expenditure and vice versa. Since, MPC is the ratio of changed consumption with changed income so it determines the slope of the AE. Hence,it can be saidthat AE slope is equal to MPC.

Economics Concept Introduction

Aggregate expenditure:

Aggregate expenditure (AE) is summation of all the final produced outputs' present value within the economy over a specified term. These include the expenditures made on consumer goods, planned investment, government expenditure and exports import gap. Slope of this line always matches MPC.

Answer 6

Chapter 27A, Problem 1QFR

To determine

(a)

To explain:

The reason for equality between slope of the consumption function with MPC.

Expert Solution

Answer to Problem 1QFR

MPC is the ratio of an overall increase in pay spent by a customer on the produced goods andservices,as compared to saving it. It matches with the consumption function'slope.

Explanation of Solution

MPC is a key concept of Keynesian macroeconomic theory.It is enumerated through the division ofthe change arisen in consumption level by the change arisen in income level. When the changesin income are plotted on the X axis and changes in consumption are plotted on the Y axis, then the MPC can be depicted which is sloped line of the original consumption function.

MPC is also called consumption function that means the consumption function's slope is always equal to MPC. This is because consumption function slopes positively when MPC value is positive. The MPC value is lower than unity as the increasing rate of consumption is very low than the increasing rate of income. When consumption function becomes a straight one, MPC value remains constant at every income level.So,it can be finished that the slope between any two points on consumption function delivers the MPC value.

Economics Concept Introduction

Consumption function:

Consumption function is the mathematical expression of the functional connection between complete level of consumption and an economy's gross national income.This function's slope matches MPC.

Answer 7

Chapter 27A, Problem 1QFR

To determine

(a)

To explain:

The reason for equality between slope of the consumption function with MPC.

Answer 8

Expert Solution

Answer to Problem 1QFR

MPC is the ratio of an overall increase in pay spent by a customer on the produced goods andservices,as compared to saving it. It matches with the consumption function'slope.

Answer 9

Expert Solution

Answer 10

Expert Solution

Answer 11

Expert Solution

Answer 12

Explanation of Solution

MPC is a key concept of Keynesian macroeconomic theory.It is enumerated through the division ofthe change arisen in consumption level by the change arisen in income level. When the changesin income are plotted on the X axis and changes in consumption are plotted on the Y axis, then the MPC can be depicted which is sloped line of the original consumption function.

MPC is also called consumption function that means the consumption function's slope is always equal to MPC. This is because consumption function slopes positively when MPC value is positive. The MPC value is lower than unity as the increasing rate of consumption is very low than the increasing rate of income. When consumption function becomes a straight one, MPC value remains constant at every income level.So,it can be finished that the slope between any two points on consumption function delivers the MPC value.

Answer 13

Economics Concept Introduction

Consumption function:

Consumption function is the mathematical expression of the functional connection between complete level of consumption and an economy's gross national income.This function's slope matches MPC.

Answer 14

To determine

(b)

To explain:

The equality between slope of the aggregate expenditure (AE) function with MPC.

Expert Solution

Answer to Problem 1QFR

Along with some other aggregate marginal expenditure, MPC primarily makes the base of the AE curve's slope. AE grows at the same speed with that of MPC in initial level.

Explanation of Solution

The MPC as the slope of the consumption function line tends to form the basis of the aggregate expenditures line's slope. This slope is built up with the MPI,marginal propensity for government purchases(MPG) andmarginal propensity to import(MPM)also. The aggregate line possesses positive slope reflecting induced expenditures. These expenditures are aggregate expenditures dependent on income or production level. If the aggregate economy can generate huge income, then all the four macroeconomic sectors will be induced to incur more expenditure and vice versa. Since, MPC is the ratio of changed consumption with changed income so it determines the slope of the AE. Hence,it can be saidthat AE slope is equal to MPC.

Economics Concept Introduction

Aggregate expenditure:

Aggregate expenditure (AE) is summation of all the final produced outputs' present value within the economy over a specified term. These include the expenditures made on consumer goods, planned investment, government expenditure and exports import gap. Slope of this line always matches MPC.

Answer 15

To determine

(b)

To explain:

The equality between slope of the aggregate expenditure (AE) function with MPC.

Answer 16

Expert Solution

Answer to Problem 1QFR

Along with some other aggregate marginal expenditure, MPC primarily makes the base of the AE curve's slope. AE grows at the same speed with that of MPC in initial level.

Answer 17

Expert Solution

Answer 18

Expert Solution

Answer 19

Expert Solution

Answer 20

Explanation of Solution

The MPC as the slope of the consumption function line tends to form the basis of the aggregate expenditures line's slope. This slope is built up with the MPI,marginal propensity for government purchases(MPG) andmarginal propensity to import(MPM)also. The aggregate line possesses positive slope reflecting induced expenditures. These expenditures are aggregate expenditures dependent on income or production level. If the aggregate economy can generate huge income, then all the four macroeconomic sectors will be induced to incur more expenditure and vice versa. Since, MPC is the ratio of changed consumption with changed income so it determines the slope of the AE. Hence,it can be saidthat AE slope is equal to MPC.

Answer 21

Economics Concept Introduction

Aggregate expenditure:

Aggregate expenditure (AE) is summation of all the final produced outputs' present value within the economy over a specified term. These include the expenditures made on consumer goods, planned investment, government expenditure and exports import gap. Slope of this line always matches MPC.

Answer 22

Ch. 27A - Prob. 1QFR Ch. 27A - Prob. 2QFR Ch. 27A - Prob. 3QFR

(a) To explain: The reason for equality between slope of the consumption function with MPC.

(a) To explain: The reason for equality between slope of the consumption function with MPC.

Answer to Problem 1QFR

Explanation of Solution

(b) To explain: The equality between slope of the aggregate expenditure (AE) function with MPC.

Answer to Problem 1QFR

Explanation of Solution

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Chapter 27A Solutions

(a)

To explain:

The reason for equality between slope of the consumption function with MPC.

(b)

To explain:

The equality between slope of the aggregate expenditure (AE) function with MPC.