1. Complete the accompanying table with disposable income (DI) and consumption (C) schedulesfor a private, closed economy. All figures are in billions of dollars.DIConsumptionSavingАРСAPSMPCMPS8.40408072120104160136200168240200(a) Refer to the above data. If plotted on a graph, the slope of the consumption schedule would be:(b) The break-even level of income is ($) where saving equals ( $:).Households dissave ( $).Dissaving occurs at the lowest levels of income as householdsspend ( more, less ) than they receive in disposable income. This dissaving could occur withhouseholds liquidating (selling for cash) their assets or borrowing money. As income rises we seethat savings ( increases, decreases ) by a greater and greater amount.(c) If consumption increases by $10 billion at each level of disposable income, the average propensity toconsume (APC) will ( change, unchange) and/but the marginal propensity to consume (MPC)will( change, not change).(d) (APC, MPC) is the fraction of any specific level of DI spent on consumer goods. (APS, MPS) is thefraction of any specific level of DI that is saved. Thus, as DI increases, the APC ( rises, falls ) APS (rises, falls ).(e) When your income changes there are only two possible options regarding what to do with it: Youeither spend it or you save it. (APC, MPC) is the fraction of the change in income (ADI) spent; so, thefraction of the change in income (ADI)not spent must be saved and this is the (APS, MPS).The change in the dollars spent (AC) or saved (AS) will appear in the numerator and together theymust add to the total change in income. Since the denominator is the total change in income (ADI),the sum of the MPC and MPS is

Complete the accompanying table with disposable income (DI) and consumption (C) schedules for a private, closed economy. All figures are in billions of dollars. DI Consumption Saving АРС APS MPC MPS 8 ----- ---- ---- ---- 40 40 80 72 120 104 160 136 200 168 240 200 Refer to the above data. If plotted on a graph, the slope of the consumption schedule would be: O The break-even level of income is ($ ) where saving equals ( $

Complete the accompanying table with disposable income (DI) and consumption (C) schedules for a private, closed economy. All figures are in billions of dollars. DI Consumption Saving АРС APS MPC MPS 8 ----- ---- ---- ---- 40 40 80 72 120 104 160 136 200 168 240 200 Refer to the above data. If plotted on a graph, the slope of the consumption schedule would be: O The break-even level of income is ($ ) where saving equals ( $

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter9: Aggregate Demand

Section: Chapter Questions

Problem 1.1P

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