The relationship between MPC and MPS and aggregate output and aggregate income.

Question

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Answer 1

Question

Chapter 8, Problem 1.1P

To determine

The relationship between MPC and MPS and aggregate output and aggregate income.

Expert Solution & Answer

Explanation of Solution

Option (a):

MPC is the marginal propensity to consume which represents that portion of change in income that is consumed or spent.

Option (b):

MPS is the marginal propensity to save which represents that portion of change in income that is saved.

Option (c):

Aggregate output refers to the total quantity of goods and services produced over a given period of time in an economy.

Option (d):

Aggregate income refers to the total amount received by all factors of production in a given time period.

The relationship between MPC and MPS can be established as follows:

Since all the income is either consumed (spent) or saved; MPC+MPS=1 .

The relationship between aggregate output and aggregate income is that both are actually the same thing viewed from different points.

Economics Concept Introduction

Concept introduction:

Marginal propensity to consume (MPC): Marginal propensity to consume refers to the sensitivity of change in the consumption level due to the changes occurred in the income level.

Marginal propensity to save (MPS): The ratio of change in saving when there is a change in disposable income.

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Answer

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As indicated in the attached image, U.S. earnings for high- and low-skill workers as measured by educational attainment began diverging in the 1980s. The remaining questions in this problem set use the model for the labor market developed in class to walk through potential explanations for this trend. 1. Assume that there are just two types of workers, low- and high-skill. As a result, there are two labor markets: supply and demand for low-skill workers and supply and demand for high-skill workers. Using two carefully drawn labor-market figures, show that an increase in the demand for high skill workers can explain an increase in the relative wage of high-skill workers. 2. Using the same assumptions as in the previous question, use two carefully drawn labor-market figures to show that an increase in the supply of low-skill workers can explain an increase in the relative wage of high-skill workers.

Answer 2

Question

Chapter 8, Problem 1.1P

To determine

The relationship between MPC and MPS and aggregate output and aggregate income.

Expert Solution & Answer

Explanation of Solution

Option (a):

MPC is the marginal propensity to consume which represents that portion of change in income that is consumed or spent.

Option (b):

MPS is the marginal propensity to save which represents that portion of change in income that is saved.

Option (c):

Aggregate output refers to the total quantity of goods and services produced over a given period of time in an economy.

Option (d):

Aggregate income refers to the total amount received by all factors of production in a given time period.

The relationship between MPC and MPS can be established as follows:

Since all the income is either consumed (spent) or saved; MPC+MPS=1 .

The relationship between aggregate output and aggregate income is that both are actually the same thing viewed from different points.

Economics Concept Introduction

Concept introduction:

Marginal propensity to consume (MPC): Marginal propensity to consume refers to the sensitivity of change in the consumption level due to the changes occurred in the income level.

Marginal propensity to save (MPS): The ratio of change in saving when there is a change in disposable income.

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Answer 3

Question

Chapter 8, Problem 1.1P

To determine

The relationship between MPC and MPS and aggregate output and aggregate income.

Expert Solution & Answer

Explanation of Solution

Option (a):

MPC is the marginal propensity to consume which represents that portion of change in income that is consumed or spent.

Option (b):

MPS is the marginal propensity to save which represents that portion of change in income that is saved.

Option (c):

Aggregate output refers to the total quantity of goods and services produced over a given period of time in an economy.

Option (d):

Aggregate income refers to the total amount received by all factors of production in a given time period.

The relationship between MPC and MPS can be established as follows:

Since all the income is either consumed (spent) or saved; MPC+MPS=1 .

The relationship between aggregate output and aggregate income is that both are actually the same thing viewed from different points.

Economics Concept Introduction

Concept introduction:

Marginal propensity to consume (MPC): Marginal propensity to consume refers to the sensitivity of change in the consumption level due to the changes occurred in the income level.

Marginal propensity to save (MPS): The ratio of change in saving when there is a change in disposable income.

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Answer 4

Question

Chapter 8, Problem 1.1P

To determine

The relationship between MPC and MPS and aggregate output and aggregate income.

Expert Solution & Answer

Explanation of Solution

Option (a):

MPC is the marginal propensity to consume which represents that portion of change in income that is consumed or spent.

Option (b):

MPS is the marginal propensity to save which represents that portion of change in income that is saved.

Option (c):

Aggregate output refers to the total quantity of goods and services produced over a given period of time in an economy.

Option (d):

Aggregate income refers to the total amount received by all factors of production in a given time period.

The relationship between MPC and MPS can be established as follows:

Since all the income is either consumed (spent) or saved; MPC+MPS=1 .

The relationship between aggregate output and aggregate income is that both are actually the same thing viewed from different points.

Economics Concept Introduction

Concept introduction:

Marginal propensity to consume (MPC): Marginal propensity to consume refers to the sensitivity of change in the consumption level due to the changes occurred in the income level.

Marginal propensity to save (MPS): The ratio of change in saving when there is a change in disposable income.

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Answer 5

Chapter 8, Problem 1.1P

To determine

The relationship between MPC and MPS and aggregate output and aggregate income.

Expert Solution & Answer

Explanation of Solution

Option (a):

MPC is the marginal propensity to consume which represents that portion of change in income that is consumed or spent.

Option (b):

MPS is the marginal propensity to save which represents that portion of change in income that is saved.

Option (c):

Aggregate output refers to the total quantity of goods and services produced over a given period of time in an economy.

Option (d):

Aggregate income refers to the total amount received by all factors of production in a given time period.

The relationship between MPC and MPS can be established as follows:

Since all the income is either consumed (spent) or saved; MPC+MPS=1 .

The relationship between aggregate output and aggregate income is that both are actually the same thing viewed from different points.

Economics Concept Introduction

Concept introduction:

Marginal propensity to consume (MPC): Marginal propensity to consume refers to the sensitivity of change in the consumption level due to the changes occurred in the income level.

Marginal propensity to save (MPS): The ratio of change in saving when there is a change in disposable income.

Answer 6

Chapter 8, Problem 1.1P

To determine

The relationship between MPC and MPS and aggregate output and aggregate income.

Expert Solution & Answer

Explanation of Solution

Option (a):

MPC is the marginal propensity to consume which represents that portion of change in income that is consumed or spent.

Option (b):

MPS is the marginal propensity to save which represents that portion of change in income that is saved.

Option (c):

Aggregate output refers to the total quantity of goods and services produced over a given period of time in an economy.

Option (d):

Aggregate income refers to the total amount received by all factors of production in a given time period.

The relationship between MPC and MPS can be established as follows:

Since all the income is either consumed (spent) or saved; MPC+MPS=1 .

The relationship between aggregate output and aggregate income is that both are actually the same thing viewed from different points.

Economics Concept Introduction

Concept introduction:

Marginal propensity to consume (MPC): Marginal propensity to consume refers to the sensitivity of change in the consumption level due to the changes occurred in the income level.

Marginal propensity to save (MPS): The ratio of change in saving when there is a change in disposable income.

Answer 7

Chapter 8, Problem 1.1P

To determine

The relationship between MPC and MPS and aggregate output and aggregate income.

Answer 8

Expert Solution & Answer

Explanation of Solution

Option (a):

MPC is the marginal propensity to consume which represents that portion of change in income that is consumed or spent.

Option (b):

MPS is the marginal propensity to save which represents that portion of change in income that is saved.

Option (c):

Aggregate output refers to the total quantity of goods and services produced over a given period of time in an economy.

Option (d):

Aggregate income refers to the total amount received by all factors of production in a given time period.

The relationship between MPC and MPS can be established as follows:

Since all the income is either consumed (spent) or saved; MPC+MPS=1 .

The relationship between aggregate output and aggregate income is that both are actually the same thing viewed from different points.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Economics Concept Introduction

Concept introduction:

Marginal propensity to consume (MPC): Marginal propensity to consume refers to the sensitivity of change in the consumption level due to the changes occurred in the income level.

Marginal propensity to save (MPS): The ratio of change in saving when there is a change in disposable income.

Answer 12

Ch. 8 - Prob. 1.1P Ch. 8 - Fill in the aggregate saving column in the...Ch. 8 - Prob. 1.3P Ch. 8 - Prob. 1.4P Ch. 8 - Prob. 2.1P Ch. 8 - Prob. 2.2P Ch. 8 - Prob. 3.1P Ch. 8 - Prob. 4.1P Ch. 8 - Prob. 4.3P Ch. 8 - Prob. 4.4P

The relationship between MPC and MPS and aggregate output and aggregate income.

The relationship between MPC and MPS and aggregate output and aggregate income.

Explanation of Solution

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