If the Marginal Propensity to Consume is 0.9, this means that For each $1 increase in income, residents will increase their consumption by 10 cents. For each $2 increase in government purchase, spending in the economy will increase by $9.00. For each $2 increase in income, residents will increase their savings by 90 cents. For each $2 increase in taxes, spending in the economy will decrease by $18.00. For each $2 increase in government purchase, spending in the economy will increase by $16.00.
If the Marginal Propensity to Consume is 0.9, this means that For each $1 increase in income, residents will increase their consumption by 10 cents. For each $2 increase in government purchase, spending in the economy will increase by $9.00. For each $2 increase in income, residents will increase their savings by 90 cents. For each $2 increase in taxes, spending in the economy will decrease by $18.00. For each $2 increase in government purchase, spending in the economy will increase by $16.00.
Chapter23: The Aggregate Expenditure Model
Section: Chapter Questions
Problem 6P
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Question
If the Marginal Propensity to Consume is 0.9, this means that
For each $1 increase in income, residents will increase their consumption by 10 cents.
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For each $2 increase in government purchase, spending in the economy will increase by $9.00.
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For each $2 increase in income, residents will increase their savings by 90 cents.
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For each $2 increase in taxes, spending in the economy will decrease by $18.00.
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For each $2 increase in government purchase, spending in the economy will increase by $16.00. |
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