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 $500 billion. Based on your analysis, you would expect consumption 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 $500 billion. Based on your analysis, you would expect consumption be billion and saving to be billion.
Chapter18: The Keynesian Model
Section: Chapter Questions
Problem 6SQ
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Consider a hypothetical economy in which the marginal propensity to consume (MPC) is 0.50. That is, if disposable income increases by $1, consumption increases by 50¢.
Suppose further that last year disposable income in the economy was $400 billion and consumption was $300 billion.
On the following graph, use the blue line (circle symbol) to plot this economy's consumption function based on these data.
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