Instructions: If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers. b. What is the economic meaning of b? MPC What is the economic meaning of (1- b)? MPS c. Suppose that the amount of saving that occurs at each level of national income falls by $20 but that the values of b and (1-b) remain unchanged. Restate the saving and consumption equations inserting the new numerical values. C-O'OY

Instructions: If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers. b. What is the economic meaning of b? MPC What is the economic meaning of (1- b)? MPS c. Suppose that the amount of saving that occurs at each level of national income falls by $20 but that the values of b and (1-b) remain unchanged. Restate the saving and consumption equations inserting the new numerical values. C-O'OY

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter9: Aggregate Demand

Section: Chapter Questions

Problem 3.7P

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Linear equations for the consumption, saving schedules take the general form C = a+ bY and S= -a + ( 1 - B) Y, where C, S , and Y are consumption, saving, and national income, respectively. The constant a represents the vertical intercept, and b represents the slope of the consumption schedule. A) use the following data to substitute numerical values for A and B in the consumption and savings equation B) what is the economic meaning of B? Of (1-b)? C) suppose that the amount of saving that occurs of each level of national income falls by $20 but that the values of B and (1-b) remain unchanged. Restate the saving and consumption equations inserting the new numerical values, and cite a factor that might have caused the change.
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