Foundations of Economics (8th Edition)
Foundations of Economics (8th Edition)
8th Edition
ISBN: 9780134486819
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
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Chapter 30, Problem 1SPPA
To determine

To calculate:

The level of consumption expenditure at each level of disposable income, to identify over what range of disposable income is there dissaving and to estimate the level of disposable income as which saving is zero.

Expert Solution & Answer
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Explanation of Solution

Dissaving occurs when the disposable income is zero, since the individual does not have income for their expenditure on goods and services, as a result the individual will not save a single percentage of dissaving. They are able to spend on goods and services by borrowing or purchasing goods on credit. Savings are zero when the disposable income accounts to $25 trillion, that is, in between $20 trillion and $30 trillion where disposable income equals consumption expenditure, savings account to zero.

Disposable IncomeSavingConsumption Expenditure
0-55
10-37
20-119
30129
40337
50545
Economics Concept Introduction

Disposable income:

Disposable income is the level of income that is available for individuals to spend on goods and services after deducting mandatory taxes, interests and social securities.

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Students have asked these similar questions
1.12 Study the following diagram and answer the question that follows. Expenditures (billions of dollars per year) 3500 3000 2500 2000 1500 1000 500 Figure 9.1 45 500 1000 1500 2000 2500 3000 3500 Income (billions of dollars per year) At an income level of $2,000 billion, a) Consumption equals $1,500 billion. b) Saving equals $0. c) The MPC equals 0.80. d) There is dissaving.
The slope of the line between points a and b is    4 .25 -4 -.25
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