EBK ECONOMICS
20th Edition
ISBN: 9780077660710
Author: McConnell
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Question
Chapter 28, Problem 2DQ
To determine
Consumption and saving.
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What is the initial change in consumption if an economy's MPC is 0.75 and there is a decrease in taxes of $1 billion?
O $1.75 billion
O $1 billion
O $1.33 billion
O $0.75 billion
CF
1
2
3
4.
5
Disposable income (trillions of 2005 dollars)
In the above figure, at a disposable income level of $2 trillion, saving equals
Select one:
O a. $4 trillion.
O b. zero.
O c. consumption expenditures.
O d. disposable income.
6.
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Consumption expenditure
(trillions of 2005 dollars)
5,
II
Suppose disposable income increases from $7 trillion to $8 trillion. At the same
time, consumption expenditure increases from $6.8 trillion to
MPC must equal
Thus the
O $7.8 trillion; 0.60
O $7.6 trillion; 0.80
O $7.4 trillion; 0.40
O $8 trillion; 1.00
Chapter 28 Solutions
EBK ECONOMICS
Ch. 28.2 - Prob. 1QQCh. 28.2 - Prob. 2QQCh. 28.2 - Prob. 3QQCh. 28.2 - Prob. 4QQCh. 28.5 - Prob. 1QQCh. 28.5 - Prob. 2QQCh. 28.5 - Prob. 3QQCh. 28.5 - Prob. 4QQCh. 28 - Prob. 1DQCh. 28 - Prob. 2DQ
Ch. 28 - Prob. 3DQCh. 28 - Prob. 4DQCh. 28 - Prob. 5DQCh. 28 - Prob. 6DQCh. 28 - Prob. 7DQCh. 28 - Prob. 8DQCh. 28 - Prob. 9DQCh. 28 - Prob. 1RQCh. 28 - Prob. 2RQCh. 28 - Prob. 3RQCh. 28 - Prob. 4RQCh. 28 - Prob. 5RQCh. 28 - Prob. 6RQCh. 28 - Prob. 7RQCh. 28 - Prob. 8RQCh. 28 - Prob. 9RQCh. 28 - Prob. 1PCh. 28 - Prob. 2PCh. 28 - Prob. 3PCh. 28 - Prob. 4PCh. 28 - Prob. 5PCh. 28 - Prob. 6PCh. 28 - Prob. 7PCh. 28 - Prob. 8PCh. 28 - Prob. 9PCh. 28 - Prob. 10P
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Similar questions
- Urgently needarrow_forwardIntended Spending (billions) $2,300 $2,100 $1,900 $1,700 $1,500 The marginal propensity to consume is 01 O 19/21. O 2/3. O 5/7. 45% $1,500 $1,800 $2,100 $2,400 $2,700 Gross Domestic Product (billions) impossible to tell from the graph. Consumption plus investment Consumptionarrow_forwardPlanned Aggregate Spending (billions of dollars) 200 180 160 140 120 100 80 60 O 0.5 40 20 O 0.95 0 O 0.85 0 20 O 0.75 C 1 Question 8 40 1 1 1 1 O none of the answers given is correct A 7. What is MPC if this hypothetical economy were to move the macroeconomic poin A? B 45 degree line Planned AE New Planned AE 60 80 100 120 140 160 180 200 Real GDP (in billions of dollars)arrow_forward
- Suppose consumption function is specified as C= $200 + 0.75Ya planned investment is $600, net taxes are $400, and government spending totals $500 of a hypothetical economy in 2020. Find algebraically: LO 3 A. The equilibrium level of aggregate output by equating aggregate output and planned aggregate expenditure. B. Consumption when aggregate output is at the equilibrium level. C. Saving when aggregate output is at the equilibrium level. D. Establish that leakages equal injections at the equilibrium level of aggregate output.arrow_forward8arrow_forwardIf the multiplier is 4, what is the MPC? O 0.25 O 0.5 O 0.75 1arrow_forward
- Given that marginal propensity to save (MPS) is 0.5, what is the multiplier? O 2 O 4 0.5arrow_forward4arrow_forwardI: Investment; G: Government spending; EX: Exports; T: Taxes; and IM: Imports. Suppose that I+G+EX equals $25 and the economy is in equilibrium. What is the amount of saving when T = $0 and IM = $15 at the equilibrium level? O so O $10 O $15 O $40 $25arrow_forward
- 2arrow_forwardIn a macro model where the marginal propensity to consume out of disposable income is 0.80, the net tax rate is 0.25, and the marginal propensity to import is 0.11, the simple multiplier will be O A. 3.448 O B. 2.041 OC. 0.490 O D. 1.961 O E. 1.408arrow_forwardAn increase in interest rates shifts the Investment Demand curve up and increases Business Investment Expenditures. O True O False Households' autonomous savings is exactly the same as autonomous consumption. O True O False An increase in households' wealth will increase the marginal propensity to consume. O True O False Private-Sector Savings equal Consumption Expenditures at the Break-Even Disposable Income. True O False In National Income Accounting, an increase in unplanned inventory increases actual business investment expenditures (la). O True O Falsearrow_forward
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