Macroeconomics: Principles and Policy (MindTap Course List)
13th Edition
ISBN: 9781305280601
Author: William J. Baumol, Alan S. Blinder
Publisher: Cengage Learning
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Chapter 8, Problem 3DQ
To determine
To describe: The meaning of Marginal propensity to consume, which is 0.90 for United States and also to explain the personal MPC at this stage of the life and the changes, when it reaches to the parents’ age.
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Due to an increase in consumer wealth, there is a $40 billion autonomous increase in consumer spending in the economies of Westlandia and Eastlandia. Assuming that the aggregate price level is constant, the interest rate is fixed in both countries, and there are no taxes and no foreign trade, complete the accompanying tables to show the various rounds of increased spending that will occur in both economies if the marginal propensity to consume is 0.5 in Westlandia and 0.75 in Eastlandia. What do your results indicate about the relationship between the size of the marginal propensity to consume and the multiplier?
Need help with this, please show me where to plot the two points on the graph as well. Thanks!
Monica's current income went up from $100.000 to $105,000 and she increased her current consumption by $2100. What is her marginal propensity to consume?
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Macroeconomics: Principles and Policy (MindTap Course List)
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