Draw a graph of a consumption function (with disposable income on the x-axis and consumption on the y-axis). b) On the graph from Part a, show how we can “see” the Marginal Propensity to Consume (MPC) and provide a brief explanation.
Draw a graph of a consumption function (with disposable income on the x-axis and consumption on the y-axis). b) On the graph from Part a, show how we can “see” the Marginal Propensity to Consume (MPC) and provide a brief explanation.
Chapter23: The Aggregate Expenditure Model
Section: Chapter Questions
Problem 6P
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- a) Draw a graph of a consumption function (with disposable income on the x-axis and consumption on the y-axis).
- b) On the graph from Part a, show how we can “see” the Marginal Propensity to Consume (MPC) and provide a brief explanation.
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