Consumption function is given as C = 0.4Y²+0.2Y + 50. a) Find the expression for marginal propensity to consume (MPC) and calculate the value of MPC when income (Y) = 800. What is the change in total consumption (AC) if Y changes by 0.8 units from 800? b) Find the value of Y when marginal propensity to save, MPS = 0.20
Consumption function is given as C = 0.4Y²+0.2Y + 50. a) Find the expression for marginal propensity to consume (MPC) and calculate the value of MPC when income (Y) = 800. What is the change in total consumption (AC) if Y changes by 0.8 units from 800? b) Find the value of Y when marginal propensity to save, MPS = 0.20
Chapter9: Aggregate Expenditures
Section: Chapter Questions
Problem 15E
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