Q1 4. Suppose you earn same income as one of your cousins but expect to live longer than your cousin, how would your consumption function be different than that of your cousin? Would you consumer more or less than him? 6. Average propensity to consumer along a linear consumption function is always constant; true or false? Justify your response.

Q1 4. Suppose you earn same income as one of your cousins but expect to live longer than your cousin, how would your consumption function be different than that of your cousin? Would you consumer more or less than him? 6. Average propensity to consumer along a linear consumption function is always constant; true or false? Justify your response.

Economics For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

Chapter18: The Keynesian Model

Section: Chapter Questions

Problem 7SQ

See similar textbooks

Similar questions

If consumers save 21 cents out of every dollar received, the Multiple Choice marginal propensity to save is 0.21. multiplier is 0.21. marginal propensity to consume is 0.21. marginal propensity to save is 0.79.
Choose the correct answer: . If consumption is $25,000 when income is $26,000, and consumption increases to $25,900 when income increases to $28,000, the marginal propensity to consume is: 0,59. (B) 0.65. (C) 0.55. (D) 0.45. 2) Suppose consumption is $10,000 when income is $9,000 and the marginal propensity to save equals 0.1. When income increases to $9,500, consumption will be: $8,500. (B) $10,450. (C) $10,500. (D) $10,050.
Which one of the following statements relating to marginal propensity to consume is INCORRECT? (a) Marginal propensity to consume for a given consumption function is usually less than 1; (b) If the people in a country save 30c out of every rand they earn, the marginal propensity to consume in this country is said to be 0.7; (c) If the marginal propensity to consume is given as 0.622, then the value of the simple multiplier will be 2.5; (d) The larger the value of the marginal propensity to consume, the steeper the consumption function will be.
State whether it is true or not When the marginal propensity to consume is 0 the value of investment multiplier will also be 0
In a simple economy (assume there are no taxes, thus Y is disposable income), the consumption function is C = 1000 + 0.8Y. Thus, autonomous consumption is enter your response here and the marginal propensity to consume is enter your response here. A consumer whose income increases by $100 will increase consumption by $enter your response here. Part 2 The saving function in this economy is: S=enter your response here+enter your response here Y.
If Jessica typically spends $8.00 whenever her income increases by $10.00 then her marginal propensity to consumer is. 5 .80 1.25 .20
The government spending multiplier is: A) Always bigger than the investment multiplier B) Always less than the investment multiplier C) Exactly the same as the investment multiplier D) The reciprocal of the marginal propensity to consume
Suppose a closed economy has an aggregate consumption function given by C = 50 + 0.50Yd and generates $2500 output and income in equilibrium. Suppose also that the government spends 400 and imposes a lump-sum tax of 100. What is the level of intended investment?
Suppose that the level of GDP increased by $400 billion in a private closed economy where the marginal propensity to consume is 0.60. Aggregate expenditures must have increased by. make sure the answer is accurate. Group of answer choices $400 billion. $160 billion. $240 billion. $80 billion.
Q5. Explain how including wealth in consumption functions can decrease the value of the Keynesian Multiplier.
Assume a closed economy in which disposable income starts at 1,000 and increases by 500; consumption starts at 1,100 and increases by 300; investment spending is 1,000 and government spending is 500. 1. The marginal propensity to consume (MPC) is equal to: 0.5 0.6 0.7 6 2. The multiplier is: 0.25 2 2.5 3 3.The consumption equation is: C = 500 + 0.6DI C = 500 + 0.5DI C = 100 + 0.75DI C = 100 + 0.6DI 4. Let ∆I = 1,000. What is the new equilibrium GDP" 7,000 7,500 2,000 8,500
The Wilson family has a disposable income of $70,000 annually. Currently, the Wilson family spends 80% of new disposable income on consumption. Assume that their marginal propensity to consume is 0.8 and that their autonomous consumption spending is equal to $10,000. What is the amount of the Wilson family's annual consumer spending?