EBK ECON: MACRO4
4th Edition
ISBN: 9781305562097
Author: MCEACHERN
Publisher: CENGAGE LEARNING - CONSIGNMENT
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Question
Chapter 9, Problem 1.2PA
To determine
Value of MPC, Relationship between MPC and MPS, If MPC increases, what happens to MPS,MPC related to consumption function and MPS related to saving function.
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Very briefly summarize the relationships shown by (a) the consumption schedule, (b) the saving schedule, (c) the investment demand curve, and (d) the multiplier effect. Which of these relationships are direct (positive) relationships and which are inverse (negative) relationships? Why are consumption and saving in the United States greater today than they were a decade ago?
The table shows disposable income and saving in an economy.
Calculate consumption expenditure at each level of disposable income.
Over what range of disposable income is there dissaving? Estimate the
level of disposable income at which saving is zero.
>>> Answer to 1 decimal place.
Disposable income
0
(trillions of dollars)
Saving
10
20
30
40
53--35
50
5
When disposable income is $30 trillion, consumption expenditure is $
trillion.
Suppose two successive levels of disposable personal income are $16 and $21 billion, respectively, and the change
in consumption spending between these two levels of disposable personal income is $2 billion, then the MPC will
be equal to?
0.12
0.8
0.7
0.4
0.04
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- How is it possible for consumption expenditure to be positive even when disposable income is zero?arrow_forwardI consumed all my income at every level of income.Draw my consumption and saving function.What are my MPC and MPS? Explain why it must always be true that MPC+MPS equal to 1?arrow_forwardSuppose that disposable income, consumption, and saving in some country are $400 billion, $350 billion, and $50 billion, respectively. Next, assume that disposable income increases by $40 billion, consumption rises by $28 billion, and saving goes up by $12 billion. Instructions: In part a, round your answers to 2 decimal places. In part b, round your answers to 3 decimal places. a. What is the economy's MPC? MPC = What is its MPS? MPS = b. What was the APC before the increase in disposable income? APC before = What was the APC after the increase? APC after =arrow_forward
- 4arrow_forwardThe following table shows income and consumption. Calculate: A- Saving (S), B- Marginal propensity to consume (MPC), C- Marginal propensity to save (MPS), D- Average propensity to consume (APC), E- Average propensity to save (APS). (show your calculations, write the answers to 2 decimal places) Y C S MPC MPS APC APS S = MPC = MPS = APC = APS = 300 360 410 400 600 510 800 250 1050 0.32arrow_forwardThe table shows disposable income and consumption expenditure in an economy. Calculate saving when disposable income equals $200 billion. Over what range of disposable income does consumption expenditure exceed disposable income? Calculate autonomous consumption expenditure. >>> Answer to 1 decimal place. When disposable income is $200 billion, saving is______billion dollars. >>> If your answer is negative, include a minus sign. If your answer is positive, do not include a plus sign. When disposable income is greater than $800 billion, consumption expenditure exceeds disposable income. Autonomous consumption expenditure equals$___billion. Disposable income Consumption expenditure (billions of dollars) 200 350 400 500 600 650 800 800 1,000 950arrow_forward
- Complete the following table. Given Disposable Income and an MPC, calculate the level of consumption and savings.arrow_forwardAggregate Income, Aggregate Consumption, Aggregate Saving, The value of the MPC is (Round your response to one decimal place.) Y C S $0 $200 $-200 100 250 -150 200 300 -100 300 350 -50 400 400 0 500 450 50 600 500 100arrow_forwardInvestment increases by $200 million and the value of MPC is 0.75. What would be the total increase in spending?arrow_forward
- Please explain how a rise in the household saving rate can cause a fall in GDP?arrow_forwardAssume the following consumption schedule: C= 20 + 0.9 Y, where C is consumption and Y is disposable income. At $1,100 level of disposable income: (show your cacuators) a. Find out the level of saving and consumption? b. How much are the APC and APS (to one decimal place)? c. If dispr able income increased to $2,800 and saving is $345 now. What are MPC and MPŚ (to two decimal places)?arrow_forward2. We have the following information on the economy: - Aggregate consumption is $1,000 when aggregate disposable income is zero. - When aggregate disposable income is $17,500, aggregate saving is $2,500. a. Find the equation for the aggregate consumption function. b. The planned investment in this economy is $2,000. Find the equation for the aggregate expenditure function.arrow_forward
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