MACROECONOMICS (LL)
21st Edition
ISBN: 9781260186949
Author: McConnell
Publisher: MCG
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Question
Chapter 10.2, Problem 4QQ
To determine
Consumption and disposable income.
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1. The marginal propensity to consume is:A) the change in consumption divided by the change in income.B) consumption divided by income.C) the change in consumption divided by the change in saving.D) The change in saving divided by the change in income.
Consumption function: C=500+0.8Yd , net tax: T=500, government spending: G=500, investment: I=1200, export: X=500 and imprt: M=700. According to this
Calculate the consumption and saving at Ye.
personal consumption expenditures (C) and disposable income (Y d):Ā Year C YĀ d1 300 400Ā 2 500 700Ā a. Compute the marginal propensity to consume.Ā b. Compute the amount of savings for years 1 and 2.Ā c. Compute the marginal propensity to save.
Chapter 10 Solutions
MACROECONOMICS (LL)
Ch. 10.2 - Prob. 1QQCh. 10.2 - Prob. 2QQCh. 10.2 - Prob. 3QQCh. 10.2 - Prob. 4QQCh. 10.5 - Prob. 1QQCh. 10.5 - Prob. 2QQCh. 10.5 - Prob. 3QQCh. 10.5 - Prob. 4QQCh. 10 - Prob. 1DQCh. 10 - Prob. 2DQ
Ch. 10 - Prob. 3DQCh. 10 - Prob. 4DQCh. 10 - Prob. 5DQCh. 10 - Prob. 6DQCh. 10 - Prob. 7DQCh. 10 - Prob. 8DQCh. 10 - Prob. 9DQCh. 10 - Prob. 1RQCh. 10 - Prob. 2RQCh. 10 - Prob. 3RQCh. 10 - Prob. 4RQCh. 10 - Prob. 5RQCh. 10 - Prob. 6RQCh. 10 - Prob. 7RQCh. 10 - Prob. 8RQCh. 10 - Prob. 9RQCh. 10 - Prob. 1PCh. 10 - Prob. 2PCh. 10 - Prob. 3PCh. 10 - Prob. 4PCh. 10 - Prob. 5PCh. 10 - Prob. 6PCh. 10 - Prob. 7PCh. 10 - Prob. 8PCh. 10 - Prob. 9PCh. 10 - Prob. 10P
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- The government raises taxes by Rs. 100 billion. If the marginal propensity to consumeis 0.6, what happens to the following ā do they rise or fall? By what amounts?Ā a) Public Savingb) Private Savingc) National Savingarrow_forwardConsider an economy in which GDP is $30 billion. Tax revenue is $7 billion, consumption is $15 billion, and the government has a budget surplus of $2 billion. ShowĀ your work in each of the following questions.(c) What is national saving?(d) What is the level of investment?arrow_forwardGive written answer with explanation and conclusionĀ A government policy that would reduce the saving rate is ? Ā a) giving tax breaks to increase the real return that savers receive Ā b) eliminating the social security system Ā c) increasing the government budget surplus by cutting government spending Ā d) switching the tax system to tax consumption instead of incomearrow_forward
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- YĀ Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā CĀ Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā IĀ Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā GĀ Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā X Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā $ 100Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā $ 120 Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā $ 20Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā $ 30Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā $ 10 Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā $ 300Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā $ 300Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā $ 20Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā $ 30Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā - $ 10 Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā $ 500Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā $ 480Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā $ 20Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā $ 30Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā - $ 30 Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā $ 700Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā $ 660Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā $ 20Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā $ 30Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā - $ 50 a.What is the multiplier? b.What is the equilibrium level of the real GDP? c.What is the value of autonomous consumption?arrow_forwardSuppose the MPC in an economy is 0.65 The APC is initially 0.5 and disposable income is $8 billion If disposable income incieases to $17 billon, what is the new level of saving?arrow_forwardProblem Set 4: Saving and Investment Ā Economists in Fantasialand, a closed economy, have collected the following information about the economy for a particular year: Y = 9000; C = 6000; T = 1500; G = 1700. The economists also estimate that the investment function is: I = 3300 - 100r, where r is the countryās real interest rate, expressed as a percentage (i.e. r = 1 means interest rate is one percent). Calculate private saving, public saving, national saving, investment, and the equilibrium real interest rate.arrow_forward
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