From the preceding data, you know that the level of saving in the economy last year was ____________billion and the marginal propensity to save in this economy is ___________. Suppose that this year, disposable income is projected to be $700 billion. Based on your analysis, you would expect consumption to be _______ billion and saving to be ________ billion.
From the preceding data, you know that the level of saving in the economy last year was ____________billion and the marginal propensity to save in this economy is ___________. Suppose that this year, disposable income is projected to be $700 billion. Based on your analysis, you would expect consumption to be _______ billion and saving to be ________ billion.
Chapter18: The Keynesian Model
Section: Chapter Questions
Problem 9SQP
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Question
Consider a hypothetical economy in which the marginal propensity to consume (MPC) is 0.75. That is, if disposable income increases by $1, consumption increases by 75¢.
Suppose further that last year disposable income in the economy was $500 billion and consumption was $450 billion.
On the following graph, use the blue line (circle symbol) to plot this economy's consumption function based on these data.
Fill in the blanks
From the preceding data, you know that the level of saving in the economy last year was ____________billion and the marginal propensity to save in this economy is ___________.
Suppose that this year, disposable income is projected to be $700 billion. Based on your analysis, you would expect consumption to be _______ billion and saving to be ________ billion.
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