Disposable income Consumption 200 205 225 225 250 245 275 265 300 285 Refer to the given data. The marginal propensity to consume (MPC) is: O a. 0.75 O b. 0.80 O c.0.85 C. d. 0.89
Q: Refer to problem 1. If autonomous consumption decreases by $1000. The new equilibrium level of…
A: Given I = 3400 planned investment G = 4000 government spending C = 3800 + 0.8Yd T = 1000 Taxes
Q: The part of consumption that is independent of disposable income is known as * OAutonomous…
A: Note: As you have asked multiple questions, we will solve the first question for you. If you want…
Q: G IM AE 200 200 200 s00 400 100 500 600 -100 200 500 400 150 Refer to the data above to answer this…
A: here we calculate the value of the Multiplier and choose the correct option so the calculation of…
Q: If the simple spending multiplier is 8, the marginal propensity to consume is O a. 8 1/4 wered O c.…
A: The spending multiplier represents the change in the real gross domestic product or aggregate…
Q: Assume the marginal propensity to consume is 0.5 (c1 =0.5). Given this data, which of the following…
A: Marginal propensity to consume is the proportion of change in income spent on consumption
Q: The difference between planned and unplanned spending is Select one: O a. always negative O b.…
A: Spending: It is the use of money for a specific purpose by the government or organization.
Q: Y= C+I+G C= 500 + 0.8(Y-T) I = 300 G= 700 T= 0.25Y Refer to Table 27-1. What is the level of…
A:
Q: If investment increases by $100 and, as a result, gross domestic product (GDP) ultimately increases…
A: Change in investment=$100 Change in GDP=$200
Q: The consumption schedule relates: O consumption to saving. O disposable income to domestic income. O…
A: Consumption schedule is a table that shows the relationship between Y(Income) and Consumption…
Q: 69. Consider the following consumption function C = 1100 + 0.6Yd What is the simple multiplier? O a.…
A: The formula for the multiplier is as follows : Multiplier = 1 / 1 - MPC
Q: In this consumption function C= C0 + C1*Yd equation; C1*Yd Known as a. Induced consumption O b.…
A: Definition of each component of consumption function. C0 = autonomous consumption C1 = marginal…
Q: A reduction in the tax rate might lead to an increase in the growth rate of potential output if... O…
A: Generally a reduction in tax rate is considered the fiscal expansionary role of central government…
Q: If the average propensity to consume is 0.75, and the marginal propensity to consume is 0.70, if…
A: Change in Consumption=Marginal Propensity to Consume×Change in Income Spending Multiplier=11-MPC As…
Q: If the marginal propensity to consume is equal to 0.70 and income rises by $20 billion in an…
A: The marginal propensity to consume measures the change in consumption when there is a change in the…
Q: If disposable income rose from $40,000 per year to $42,000 and desired consumption expenditures rose…
A: Marginal propensity to consume is defined as the responsiveness of the consumption in an economy to…
Q: 66. Consider the following consumption function C = 1100 + 0.6Yd What is autonomous consumption? O…
A: Autonomous consumption is being defined as the expenditures which the consumers must make even while…
Q: 17. Consider the following macroeconomic mode Time C= 200 + 0.8Y GI (Gross Investment)= 200 GP…
A: In an economy, the macroeconomic equilibrium is established at a level of real GDP where the…
Q: The total expenditure in Macroland begins with these initial levels (in trillions of dollars): GDP =…
A: Consumption function: C = Ca + MPC (Y -T) Where C is consumption Ca is autonomous consumption MPC is…
Q: Question 4 Assume the economy's consumption and saving schedules simuitaneously shift downward. This…
A: Consumption refers to the use of commodities and services by the consumers. Savings is the amount of…
Q: Suppose that income increases by 17 units and the marginal propensity to save is 1/4 (i.e. 0.25).…
A: here we calculate the change in consumption by using the consumption function so the calculation of…
Q: Assume consumption is represented by the following: C = $400 + 0.5Y. Also assume that planned…
A: Given information, Consumption: $400 + 0.5Y Investment: $100 To find: equilibrium level of income
Q: The immediate determinants of investment spending are the: OA Interest rate and the expected price…
A: Investment spending depends upon various factors, such as disposable income, marginal propensity to…
Q: 5. Suppose the following information represents current economic conditions and behavior in some…
A: Note: Since more than one questions are posted and no special request from the student, we are going…
Q: Which of the following statements are correct? Select one: O a. Households smooth their consumption…
A: In macroeconomics, the household sector consumes the final items created by the production sector.…
Q: Question 6 If a lump-sum income tax of $35 billion is levied and the MPS is 0.40, the consumption…
A: Consumption schedule shows positive relationship between consumption spending and disposable income.…
Q: Question 20 $60 O $40 + * $20 + $50 100 150 200 Disposable Income(Y) -20 Refer to the diagram. The…
A: The average propensity to consume (APC) is a measure of how much money is spent instead of saved.…
Q: If the MPC is 4/5, and policy makers decide to increase taxes by $250 billion in order to slow an…
A: Given: The MPC is = 4/5 The taxes hiked by = $250 billion To Find: The change in GDP:
Q: If disposable income increases by $1 and consumption goes up by $0.80, we can conclude that... O a.…
A: Lord K.M.Keyes explains the relationship between consumption (C) and income (Y), it is known as the…
Q: If a $5,000 increase in income leads to additional savings of $1,250, the marginal propensity to…
A: Marginal propensity to save refers to the ratio of change in saving to change in income :-
Q: If Wanda's income is reduced to zero after she loses her job, her consumption will be and her saving…
A: Every individual needs to consume in order to survive. Hence even if an individual's income is zero,…
Q: If real GDP is $2200 billion, the GDP deflator is 110, nominal net exports are $100 billion, nominal…
A: Gross domestic product(GDP) measures the money value of all final goods and services produced in an…
Q: During 2019, a country reported that its real GDP increased by $3.0 billion. If the slope of its…
A: Slope of aggregate planner expenditure is the marginal propensity to consume . And we know that…
Q: The marginal propensity to consume (MPC) can best be defined as that fraction of O real disposable…
A: Consumption spending refers to the total money spent on the final goods and services by individuals…
Q: If, in an economy, a $200 billion increase in consumption spending creates $200 billion of new…
A: Marginal propensity to consume quantifies the induced consumption for every additional dollar of…
Q: Monica's current income went up from $100,000 to $105,000 and she increased her current consumption…
A: MONICA INCOME INCREASED FROM 1,00,000 TO 1,05,000 HER CHANGE IN INCOME = $5000; SHE INCREASED HER…
Q: If the Marginal Propensity to Consume is 80%, then the Consumption Multiplier is O 8 O 2 O 1.25 O 5…
A: Multiplier show the how much income will multiplied in the economy , so its depend upon the level of…
Q: Which of the following will shift the consumption function upward? O a. An increase in disposable…
A: As the income of consumer increases, they can spend more money on consuming the goods and services.…
Q: In a model with no government or foreign sector, if autonomous consumption is c30, investment is…
A: MPC is the Marginal propensity to consume which shows the ratio of change in change in consumption…
Q: he portion of additional income that is spent on consumption is called the Da) average propensity to…
A: MPC + MPS = 1 where, MPC is Marginal Propensity to Consume MPS is Marginal Propensity to Save
Q: Which of the following is most likely to cause a rightward shift of the investment demand curve? O…
A: A rightward shift of the investment demand curve implies an increase in the demand for investment. A…
Q: 9. Suppose Dina calculates her permanent income by adaptive expectations. Year 2010 Dina's permanent…
A: Milton Friedman's Permanent Income hypothesis asserts that an individual's consumption pattern is a…
Q: A $1.5 trillion increase in investment (a component of autonomous expenditure) leads equilibrium…
A: An increase in autonomous expenditure by $1.5 trillion leads to an increase in equilibrium…
Q: If the multiplier is 5 and investment increases by $3 billion, equilibrium real GDP will increase…
A: We are given, Multiplier = 5 Increase in investment = $3 billion To find, increase in equilibrium…
Q: The total expenditure in Macroland begins with these initial levels (in trillions of dollars): GDP =…
A: Consumption function: C = Ca + MPC (Y-T) Where C is consumption Ca is autonomous consumption MPC is…
Q: Figure 3 45° line 20 16 12 1.2 12 16 20 24 Disposable income (trillions of 2005 dollars) Refer to…
A: This Graph shows a consumption line that reflects a plot of the numbers in the consumption schedule…
Q: Autonomous consumption is O consumption spending that depend on the level of income. O consumption…
A: In an economy, consumption refers to the purpose for which people make economic activities and…
Q: When there's an increase in the cost of electricity for operating firms' machines: O a. The…
A: Here, the electricity cost is a operating cost since it is use in the operations and production.…
Q: In an economy, autonomous consumption is $10. If Income is $90 and the mpc is 0.9, how much is…
A: Marginal propensity to consume refers to change in consumption with respect to change in income.…
Q: Which of the following would NOT lead to an increase in equilibrium Y*? Select one: O a. A downwards…
A: Y* is the sum of consumption spending, investment spending, government spending, and net exports.
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- Imagine there is a consumption smoother (also known as a PIH consumer) who expectsto live for another 40 years and to work for another 30 years. They just learned thatthey will receive a permanent pay increase from their job of $800. How much extra dothey consume this year? What is their marginal propensity to consume?Assume consumption is represented by the following: C = $400 + 0.5Y. Also assume that planned investment (/) equals $100. the level of Income that occurs at the equilibrium is Select one: O a. $100 O b. $150 O c. $500 O d. $1000You are an economic advisor to the government. Discuss your opinion . a) How COVID-19 pandemic will affect the consumption behavior as well as the investment done by the firms and household for the next two years? b) What are the actions or policies that the government can implement to face this situation? please answers with analysis and --graph (if possible)
- The difference between planned and unplanned spending is Select one: O a. always negative O b. unplanned changes in inventories O c inventories O d. always positiveEquation for consumption is C=40/(0.8Y) where Y= yearly income = $400. The marginal propensity to consume is _______?Please no written by hand solutions Data on before-tax income, taxes paid and consumption spending (on domestic goods and services) for the Simpson family in various years are given below. BEFORE-TAX INCOME ($) TAX PAID ($) CONSUMPTION SPENDING ($) 3000 3500 3700 4000 25 000 27 000 28 000 30 000 20 000 21 350 22 070 23 600 a. Graph the Simpsons's consumption function and find their household's marginal propensity to consume. b. How much would you expect the Simpsons to consume if their income was $32 000 and they paid taxes of $5000? c. Homer Simpson wins a lottery prize. As a result, the Simpson family increases its consumption by $1000 at each level of after-tax income. ('Income' does not include the prize money.) How does this change affect the graph of their consumption function? How does it affect their marginal propensity to consume?
- Scenario 2Suppose the marginal product of capital is MPK=2-0.001K, the capital stock depreciates at 20% rate, the tax rate on revenues is 20% and price of capital is assumned to be 1. Furthermore, the economy has full-employment level of output of 5000, government purchases are 1000. Desired consumption is given by C^d=3000-2000r+0.1Y, where Y is output and r is expected real interest rate. Initial level of capital is 1000.Refer to Scenario 2. what is the expression for desired gross investment ? A) I^d=950-1250r B)I^d=950+1250r C)I^d=1750-1250r D)I^d=1950-1250r.Scenario 2Suppose the marginal product of capital is MPK=2-0.001K, the capital stock depreciates at 20% rate, the tax rate on revenues is 20% and price of capital is assumned to be 1. Furthermore, the economy has full-employment level of output of 5000, government purchases are 1000. Desired consumption is given by C^d=3000-2000r+0.1Y, where Y is output and r is expected real interest rate. Initial level of capital is 1000. Refer to Scenario 2. What is goods market clearing real interest rate? A)r=13.84 B)r=15% C)r=2% D)r=16%Suppose that you are a PIH consumer. You expect to live for another 24 years. You expect to work for another 19 years. You just learned that you will receive a permanent raise at your job of $1700. Answer the following: (a) How much extra do you consume this year? (b) What is your marginal propensity to consume out of this income change?
- For an economy the following functions have been given:C = 100 + 0.8YS = -100 + 0.2YI = 120 – 5rMs = 120Md = 0.2Y – 5rCalculate the following:5.1.1. IS equation 5.1.2. LM equation 5.1.3. Equilibrium level of income 5.1.4. Equilibrium level of interest rate. 5.1.5 Calculate National saving. 5.1.6 Calculate money demand 5.1.7 Find consumptionQuestion 1. When the interest rate increases, the price of consumption when old relative to the price of consumption when youngoptions: O. decreasesO. increases O. has an indeterminate change O. does not change5 3. permanent Income Hypothesis a) suppose that beta=.9 and R= 2222 (that is ~22%). For an individual who acts according to the PIH, will their consumption next period be higher than current consumption or lower? b) What is the main crucial difference between the Keynesian Consumption function and the consumption function derived from the PIH (or Lifetime Income Hypothesis)? c) If Present Value of future income stream is 500,000 and a person has a beta of.8, how much will their consumption go up today if only today's income increases by 1000? How much will their consumption increase (approximately) if their income goes up by 1000 in all periods?