Exploring Macroeconomics
8th Edition
ISBN: 9781544363332
Author: Robert L. Sexton
Publisher: Sage Publications
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Question
Chapter 15, Problem 5P
To determine
To explain:
The change in autonomous consumption if there is an increase in real wealth and a positive future is expected.
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- What are the various factors which influence propensity to consumearrow_forwardWhy is investment spending unstable?arrow_forwardAssume that the level of autonomous consumption in an economy equals 600, the level of planned investment = 500. Calculate the marginal propensity to consume, if the level of income equals 3,200? Provide answer to one decimal point.arrow_forward
- What happens in the simple Keynesian model if households expect lower income in the future and decide to save more today? Adjust the graph and answer the question. Assume that investment varies directly with aggregate income. Aggregate expenditure (in billions of dollars) 10 9 8 7 5 4 3 2 1 0 0 1 2 3 4 5 6 7 Aggregate income (in billions of dollars) 8 9 AE = AI C+1 10arrow_forwardConsider an economy described by the following:Autonomous consumption ( a ) = 100Autonomous Investment = 100Marginal propensity to consume = 0.75 2. What is the consumption function for this economy?arrow_forwardWhat is the value of MPC if marginal propensity to save is .1.arrow_forward
- Consider an economy that is described by the following: Autonomous consumption = 100 Autonomous investment = 100 Marginal propensity to consume = 0.75 a. What is the consumption function of this economy? b. Derive the equilibrium income of this economy? c. How large is the change in the equilibrium income if investment rises to 200?arrow_forwardThe following are exogenous (not directly affected by income): G = 11 I = 4 X = M = 0 The consumption function is: C = k + cY, where k = 3, c = 0.8 What is the equilibrium level of GDP? What is the multiplier?arrow_forwardFind the consumption expenditure from the following:- Autonomous consumption = $300 Marginal propensity to consume = 0.44 National income = $2000arrow_forward
- How can autonomous consumption be greater than zero when disposable income equals zero?arrow_forwardExplain the Keynesian, saving-consumption relationship, and interpret consumption and saving functions on a single graph.arrow_forwardIf the marginal propensity to consume is 0.90, what is the marginal propensity to save?arrow_forward
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