Suppose that disposable income, consumption, and saving in some country are $200 billion, $150 billion, and $50 billion, respectively. Next, assume that disposable income increases by $20 billion, consumption rises by $14 billion, and saving goes up by $6 billion. Instructions: In part a, round your answers to 2 decimal places. In part b, round your answers to 3 decimal places. a. What is the economy's MPC? MPC = 0.9 What is its MPS? MPS = 0.1 b. What was the APC before the increase in disposable income? APC before What was the APC after the increase? 0.75 APC after = 0.76

Suppose that disposable income, consumption, and saving in some country are $200 billion, $150 billion, and $50 billion, respectively. Next, assume that disposable income increases by $20 billion, consumption rises by $14 billion, and saving goes up by $6 billion. Instructions: In part a, round your answers to 2 decimal places. In part b, round your answers to 3 decimal places. a. What is the economy's MPC? MPC = 0.9 What is its MPS? MPS = 0.1 b. What was the APC before the increase in disposable income? APC before What was the APC after the increase? 0.75 APC after = 0.76

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter9: Aggregate Expenditures

Section: Chapter Questions

Problem 10E

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Suppose that disposable income, consumptio, and saving in some country are $ 200 billion, $ 150 billion, and $ 50 billion respectively. Next, assume that disposobal income increase by $ 20 billion, consumption rises by $ 18 billion, and saving goes up by $ 2 billion. a) What is the economy's MPC? What is its MPS? Instructions: Round your answers to 1 decimal place. b) What was the APC before the increase in disposable income? Instructions: Round your answer to 2 decimal places. What was the APC after the increase. ( round your answer to 3 decimal places).
1. (MPC and MPS) If consumption increases by $12 billion when real disposable income increases by $15 billion, what is the value of the MPC? What is the relationship between the MPC and the MPS? If the MPC increases, what must happen to the MPS? How is the MPC related to the consumption function? How is the MPS related to the saving function?2. (Government Spending) How do changes in disposable income affect government purchases and the government purchase function? How do changes in net taxes affect the consumption function?3. (Net Exports) What factors are assumed constant along the net export function? What would be the impact on net exports of a change in real disposable income?4. Expectations and consumer confidence are important in determining fluctuations in aggregate spending. In your opinion, what is the present status of consumer confidence? Do you think consumers are pessimistic or optimistic? Briefly discuss.5. (Consumption Function) How would an increase in each of the…
Suppose that disposable income consumption and saving in some countries are 200 billion, 150 billion and 50 billion respectively. Next, assume that disposable income increases by 20 billion, consumption rises by 18 billion, in saving goes up by 2 billion. What is the economies MPC? It’s MPS? What was the APC before the increase in disposable income? After the increase?
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