Question: How can there be "Autonomous Spending" even when a person has zero income? O a) All of the above are correct. b) People need to consume at least a minimum to stay alive. O c) People need a certain level of consumption even if they do not have income. People spend money from their savings, borrowing or from unemployment or O d) pension pay.
Q: The part of consumption that is independent of disposable income is known as * OAutonomous…
A: Note: As you have asked multiple questions, we will solve the first question for you. If you want…
Q: What would happen to multiplier if investment were to be positively related to income?
A: Hello. Since you have posted multiple questions and not specified which question needs to be solved,…
Q: QUESTION 1 The marginal propensity to consume (MPC) can best be defined as that fraction of O real…
A: Answer to the question is as follows:
Q: In the figure, equilibrium expenditure is equal to Aggregate planned expenditure (trillions of 2012…
A: In an economy, the equilibrium expenditure is calculated in different ways. The given graph shows…
Q: QUESTION 21 Refer to the information provided in Figure 8.9 below to answer the questions that…
A: Aggregate expenditure is the sum of all expenditures made by individuals, firms and government…
Q: If the simple spending multiplier is 8, the marginal propensity to consume is O a. 8 1/4 wered O c.…
A: The spending multiplier represents the change in the real gross domestic product or aggregate…
Q: The difference between planned and unplanned spending is Select one: O a. always negative O b.…
A: Spending: It is the use of money for a specific purpose by the government or organization.
Q: If investment increases by $100 and, as a result, gross domestic product (GDP) ultimately increases…
A: Change in investment=$100 Change in GDP=$200
Q: B CF 3 1 2 Disposable income (trillions of 2005 dollars) In the above figure, at a disposable income…
A: Disposable income, the part of the revenue of a person for which the receiver retains full control.…
Q: In an income-expenditure model, the: O a. aggregate income is measured on the horizontal axis and…
A: The Income-Expenditure model was postulated by economist John Maynard Keynes in order to explain…
Q: Explain the difference between induced consumption expenditure and autonomous consumption…
A: Hi, since you have asked multiple questions we will answer the 1st one for you. a) The difference…
Q: Aggregate planned expenditure decreases if O a. investment increases. O b. real GDP decreases. O c.…
A: Aggregate planned expenditure is computed as:
Q: 4. The intertemporal budget constraint with three periods: Consider an economy that exists for three…
A: In economics, the budget limit basically represents all the combinations of the goods and services…
Q: The table gives real GDP (Y) and its components in billions of dollars. If real GDP is $100 billion,…
A: If real GDP is $100 billion, aggregate planned expenditure is more than real GDP. Option b is…
Q: A reduction in the tax rate might lead to an increase in the growth rate of potential output if... O…
A: Generally a reduction in tax rate is considered the fiscal expansionary role of central government…
Q: If the average propensity to consume is 0.75, and the marginal propensity to consume is 0.70, if…
A: Change in Consumption=Marginal Propensity to Consume×Change in Income Spending Multiplier=11-MPC As…
Q: If the marginal propensity to consume is equal to 0.70 and income rises by $20 billion in an…
A: The marginal propensity to consume measures the change in consumption when there is a change in the…
Q: If disposable income rose from $40,000 per year to $42,000 and desired consumption expenditures rose…
A: Marginal propensity to consume is defined as the responsiveness of the consumption in an economy to…
Q: 66. Consider the following consumption function C = 1100 + 0.6Yd What is autonomous consumption? O…
A: Autonomous consumption is being defined as the expenditures which the consumers must make even while…
Q: What is meant by "autonomous consumption"?
A: Since you have asked multiple question, we will solve the first question for you. If you want any…
Q: Refer to problem 2. The equilibrium level of real GDP is * O $2,500 O $2,400 O $2,300 O $2,200
A: The real GDP is said to be at equilibrium when the total amount of output produced in an economy is…
Q: Question 4 Assume the economy's consumption and saving schedules simuitaneously shift downward. This…
A: Consumption refers to the use of commodities and services by the consumers. Savings is the amount of…
Q: Suppose that income increases by 17 units and the marginal propensity to save is 1/4 (i.e. 0.25).…
A: here we calculate the change in consumption by using the consumption function so the calculation of…
Q: Assume consumption is represented by the following: C = $400 + 0.5Y. Also assume that planned…
A: Given information, Consumption: $400 + 0.5Y Investment: $100 To find: equilibrium level of income
Q: Say, the expenditure multiplier for an economy is 2. An increase in government spending by $300…
A: here we calculate how much economy boost due to government expenditure , so the calculation of the…
Q: When the general price level rises, Select one: O a. investment rises as a result of the multiplier…
A: The one reason due to which the aggregate demand curve slope downwards is the real wealth effect.…
Q: Which of the following statements are correct? Select one: O a. Households smooth their consumption…
A: In macroeconomics, the household sector consumes the final items created by the production sector.…
Q: QUESTION 1 Below is the data for an economy in the year 2016. Gross Domestic Product = $25,000…
A: Aggregate expenditure is the sum of consumption, investment, government spending and net exports.
Q: Question 6 If a lump-sum income tax of $35 billion is levied and the MPS is 0.40, the consumption…
A: Consumption schedule shows positive relationship between consumption spending and disposable income.…
Q: 4. The intertemporal budget constraint with three periods: Consider an economy that exists for three…
A: Answer given in second step.
Q: Given the data shown in the table below, if planned investment increased by $100, the new…
A: GDP is the value of all final goods and services produced in an economy over a given period of time.…
Q: lumber mill in BC, Canada cut Canadian trees into ear, but ended in inventory only to be sold this…
A: Below points are to be considered: *Trees were cut in last year. *Sold for $322715 in the current…
Q: On a graph of a consumption function, what is the significance of the 45-degree line? O a. It…
A: Answer: a (It connects all points where desired consumption equals actual disposable income)…
Q: If the MPC is 4/5, and policy makers decide to increase taxes by $250 billion in order to slow an…
A: Given: The MPC is = 4/5 The taxes hiked by = $250 billion To Find: The change in GDP:
Q: If disposable income increases by $1 and consumption goes up by $0.80, we can conclude that... O a.…
A: Lord K.M.Keyes explains the relationship between consumption (C) and income (Y), it is known as the…
Q: In the one-period, closed economy model, why does government spending crowd out private purchases? O…
A: Simply put, ‘People’s Collection’ means a fall in Investment due to rising interest rates caused by…
Q: During 2019, a country reported that its real GDP increased by $3.0 billion. If the slope of its…
A: Slope of aggregate planner expenditure is the marginal propensity to consume . And we know that…
Q: When the general price level falls Select one: a. investment falls as a result of the real wealth…
A: The real wealth effect explains that if the price level decreases, then the purchasing power of the…
Q: According to the text, a "multiplier" is used as an assessment and evaluation tool for several…
A: The proportion by which a particular variable increases/decreases as a response to fluctuations in…
Q: The larger the MPC, Select one: O a. the larger the multiplier. b. the smaller the multiplier. O c.…
A: Meaning of Macroeconomics: The term macroeconomics refers to the situation of economic and…
Q: The graph of the consumption function has consumption expenditure on the vertical axis and Select…
A: In 1936, the concept of consumption function was introduced by John Maynard Keynes. The consumption…
Q: If the multiplier is 5 and investment increases by $3 billion, equilibrium real GDP will increase…
A: We are given, Multiplier = 5 Increase in investment = $3 billion To find, increase in equilibrium…
Q: Which of the following is not a valid expenditure function? OŪ P.P, O UP. O None of these can be…
A: As we know that the expenditure function is strictly increasing in price p. If e(p,u) is an…
Q: All of the following are true when there is an unplanned decrease in inventories, except: O a.…
A: Inventory is the set of goods, materials, and other items that helps to achieve the resale goal of…
Q: Quèstion 4 Assume the economy's consumption and saving schedules simultaneously shift downward. This…
A: Disposable income is the sum of consumption and savings. Y = C + S
Q: If an economy is producing a level of output which is lower than the equilibrium level, planned…
A: If the economy is producing at an output that is lower than the planned output, then the planned…
Q: In an economy, autonomous consumption is $10. If Income is $90 and the mpc is 0.9, how much is…
A: Marginal propensity to consume refers to change in consumption with respect to change in income.…
Q: Which of the following would NOT lead to an increase in equilibrium Y*? Select one: O a. A downwards…
A: Y* is the sum of consumption spending, investment spending, government spending, and net exports.
Q: QUESTION 8 Leisure, I Consider the picture above, in which the consumer chooses to dedicate all of…
A: Here, the given graph shows the relationship between consumption and leisure choices of a consumer.
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- Imagine there is a consumption smoother (also known as a PIH consumer) who expectsto live for another 40 years and to work for another 30 years. They just learned thatthey will receive a permanent pay increase from their job of $800. How much extra dothey consume this year? What is their marginal propensity to consume?If you practice consumption smoothing, O you always spend less than you earn. there will be times in your life when it makes sense to borrow. O you make sure your current consumption matches your current income. O you do not save for the future.Explain how does adecrease in the current income y affect the consumer’s consumption-saving decision. In particular,explain: 1) How will current consumption c, future consumption c', and savings s change; 2) Arethere any substitution effect or income effect. Make sure you draw two figures, one for the borrowersand one for the lenders.
- Explain how does adecrease in the current income y affect the consumer’s consumption-saving decision. In particular,explain: 1) How will current consumption c, future consumption c′, and savings s change; 2) Arethere any substitution effect or income effect. Make sure you draw two figures, one for the borrowersand one for the lendersYou are an economic advisor to the government. Discuss your opinion . a) How COVID-19 pandemic will affect the consumption behavior as well as the investment done by the firms and household for the next two years? b) What are the actions or policies that the government can implement to face this situation? please answers with analysis and --graph (if possible)QUESTION 1An individual lives for two periods and decides how much to consume in each period.- In the first period his consumption equals C1 and his income Y1 = 200- In the second period his consumption equals C2 and his income Y2 = 100He can save or borrow money in the first period to finance his consumption in the second period.The interest rate he gets in case he saves or has to pay in case he borrows money equals 7%.Determine the budget constraint of this individual. C2 = −0.935·C1 +314C2 =−1.07·C1 +314C2 =−0.8·C1 +314C2 =−1.08·C1 +314 QUESTION 2The total production of a good y is determined by the production function y = 3L2/3K1/3, where L is labour input and K capital input.The reward (factor prices) for labour and capital are, l = 27 en r = 2, respectively.The producer needs to produce 9000 units of good y.How much units of labour will he hire if he wants to miminize his total costs? 1587,4839,953000515,23 QUESTION 3A good is traded on a perfectly competitive…
- 1. What would happen to multiplier if investment were to be positively related to income? 2. is it possible for total saving to fall when people beome more thirfty? 3. What is meant by multiplier?Why shoul the value of multiplier rise when people spend more on consumption?Suppose that you are a PIH consumer. You expect to live for another 24 years. You expect to work for another 19 years. You just learned that you will receive a permanent raise at your job of $1700. Answer the following: (a) How much extra do you consume this year? (b) What is your marginal propensity to consume out of this income change?A consumer has $280 to spend on two commodities, the first of which costs $2 per unit and the second $5 per unit. Suppose that the utility derived by the consumer from x units of the first commodity and y units of the second is given byU(x,y)=100x0.25y0.75How many units of each commodity should the consumer buy to maximize utility? Compute the Lagrange multiplier λ and interpret in economic terms.
- Assume consumption is represented by the following: C = $400 + 0.5Y. Also assume that planned investment (/) equals $100. the level of Income that occurs at the equilibrium is Select one: O a. $100 O b. $150 O c. $500 O d. $1000Felice lives and works for two periods. In the first period, she earns 520 coconuts and in thesecond period, she earns 570 coconuts. In each period, she pays 20 coconuts in taxes.a. Suppose that Felice can save or borrow from a bank at the same interest rate of 10%.Suppose also that she likes to consume today 240 coconuts. Draw herbudget constraint including both intercepts, her endowment point including its coordinates,and use an indifference curve to show her optimal consumption point and its coordinates.b. Suppose that the government cuts taxes by 10 coconuts. What will the government haveto do to taxes in the future period to meet its lifetime budget constraint?c. What is the effect of the government’s action on Felice’s lifetime wealth, budgetconstraint and endowment point? Show and explain.d. What is the effect of the tax cut on her current consumption and welfare? Does theRicardian equivalence hold? Explain!e. Now suppose that the economy enters a recession, and some people…1. What is meant by "autonomous consumption"? 2. Explain the consumption puzzle?