Consider the following economy: Y+C+I+G Y=8000 G=2500 T=2000 C=1000+2/3(Y-T) I=1200-10,000r 1) How large is the subsistence consumption of households? 2) What is the MPC(marginal propensity to consume) in this economy? What is its economic interpretation?
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Consider the following economy:
Y+C+I+G
Y=8000
G=2500
T=2000
C=1000+2/3(Y-T)
I=1200-10,000r
1) How large is the subsistence consumption of households?
2) What is the MPC(marginal propensity to consume) in this economy? What is its economic interpretation?
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- The following are exogenous (not directly affected by income): G = 11 I = 4 X = M = 0 The consumption function is: C = k + cY, where k = 3, c = 0.8 What is the equilibrium level of GDP? What is the multiplier?Construct a consumption function from the data given here and determine the MPC. Given the consumption function in the above question, what is the relationship between disposable income and consumption?Construct a consumption function from the data given here and determine the MPC. Given the consumption function in the above question, what is the relationship between disposable income and consumption? Is it direct or indirect and then explain what it means.
- Which of the following will increase the slope of the demand curve in the goods market to indicate an increase in the level of output and income? Select one: a. An increase in autonomous investment. b. An increase in the marginal propensity to consume. c. An increase in government spending. d. An increase in taxation.Consider an economy that is described by the following: Autonomous consumption = 100 Autonomous investment = 100 Marginal propensity to consume = 0.75 a. What is the consumption function of this economy? b. Derive the equilibrium income of this economy? c. How large is the change in the equilibrium income if investment rises to 200?Consider the hypothetical country of Kejimkujik. Suppose that national income in Kejimkujik is $300 billion, households pay $100 billion in taxes, household consumption is equal to $160 billion, and the marginal propensity to consume (MPC) is 0.6. On the following graph, use the blue line (circle symbol) to plot the economy's consumption function. Consumption Function050100150200250300350400450500500450400350300250200150100500CONSUMPTION (Billions of dollars)DISPOSABLE INCOME (Billions of dollars) Suppose now that Kejimkujik’s national income increases to $330 billion. Assuming the amount paid in taxes is fixed at $100 billion and that MPC = 0.6, what is the new amount of household consumption? $148 billion $219.4 billion $220.6 billion $178 billion
- Consider the households in the US that held sub-prime mortgages before/during the financial crisis. Assuming high levels of debt and low job security (both features of sub-prime mortgage holders), are these sub-prime households more likely to have a large or a small marginal propensity to consume out of income? Provide reasons for your answer.What is ? 1-)Unemployment 2-)Population 3-)Marginal Propensity To ConsumeIs the following statement TRUE or FALSE? Please provide reason for the answer. The marginal propensity to consume must be smaller than one.
- The following are exogenous (not directly affected by income): G = 9 I = 14 X = M = 0 The consumption function is: C = k + cY, where k = 8, c = 0.6 at the point where this economy is in equilibrium what is the total level of withdrawals? Give the number to ONE decimal place.The following are exogenous (not directly affected by income): G = 9 I = 14 X = M = 0 The consumption function is: C = k + cY, where k = 8, c = 0.6 What is the equilibrium level of GDP? State to ONE decimal place What is the multiplier for this economy? The following are exogenous (not directly affected by income): G = 11 I = 4 X = M = 0 The consumption function is: C = k + cY, where k = 3, c = 0.8 What is the equilibrium level of GDP? What is the multiplier? Same information as in the previous question: The following are exogenous (not directly affected by income): G = 11 I = 4 X = M = 0 The consumption function is: C = k + cY, where k = 3, c = 0.8 Imagine the maximum potential output or real GDP of this economy is 100. Assume that is the same as saying we reach the edge of the PPF at 100. Now assume we want to get that economy from the current level of GDP to its maximum potential of 100. We can do this in two ways - either increase government spending (G) or reduce taxes, (we…Given the following information, answer the question. Autonomous consumption = R100 million Investment spending = R300 million Government spending = R200 million Taxes = R60 million Marginal propensity to consume = ¾ The equilibrium level of output and income is equal to ______. Select one: A. R2 160 million B. R2 580 million C. R2 640 million D. R2 220 million
