Macroeconomics
10th Edition
ISBN: 9781319105990
Author: Mankiw, N. Gregory.
Publisher: Worth Publishers,
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Question
Chapter 19, Problem 2QQ
To determine
Smooth consumption over time.
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Students have asked these similar questions
Disposable income is the amount a household has
A
after subtracting autonomous spending.
B
after subtracting taxes and transfer payments to income.
C
sometimes called discretionary spending.
D
available for consumption spending and saving.
Suppose your annual income is $73,000 this year and it
is expected to increase 30% next year. The market
interest rate is 4%. a. a.)Please illustrate all possible
consumption patterns with a figure. Do not forget to
label your axes. b.) You believe that your consumption
this year and your consumption next year should be the
same. If you follow your plan and consume equally in
those two years, how much should you save or borrow
this year?
1. Country X has following data:
C = 20 + 0.8Y4, I = 30, G = 40, Tx = 20, T, = 15, X = 60, M = 20 + 0.04Y, incoming year growth
target is 600, All figures is billion. Please calculate:
a. National income equilibrium!
b. Consumption and saving equilibrium!
c. Government income from tax!
d. How much change in government consumption if they want to achieve growth target?
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Similar questions
- Marginal propensity to save is: A total saving divided by total income. B the change in total saving divided by the change in total income. C total saving when total income is zero. D total saving that is based on expected future income.arrow_forwardA reduction in personal income taxes increases Aggregate Demand through a. an increase in private savings. b. an increase in investment spending. c. an increase in personal consumption. d. an increase in national savings.arrow_forwardConsumption function C = 32 +0.8 Y. a. Create saving function b. How much is consumption when saving = 0 c. How much income when the savings are 20arrow_forward
- The multiplier is the ratio of the change in ________ to a change in ________. Select one: a. the level of saving; the level of consumption b. autonomous consumption; induced consumption c. the MPC; the MPS d. the equilibrium level of output; some autonomous variablearrow_forwardTrue/False and Explain An increase in savings implies a decrease in consumption and therefore a decrease in GDP.arrow_forwardIf there is an increase in the personal income tax rate, and people do not receive a pay increase, then disposable income will... decrease or increase Therefore, we can expect consumption spending to... decrease or increase and private saving to..... increase or decrease .arrow_forward
- Explain what happens to consumption, investment, and the interest rate when the government increases taxes. Show graphically the effect of increased taxes when saving is not dependent on interest rate.arrow_forwardAccording to the life-cycle income hypothesis, if the retirement age increases but life expectancy decreases: a. consumption increases and savings increase b. consumption increases and savings might increase or decrease c. consumption decreases and savings decrease d. consumption decreases and savings might increase or decrease e. consumption might increase or decrease and savings decreasearrow_forwardIf current and future consumption are both normal goods, a decrease in the interest rate will necessarily A. cause savers to save more. B. cause borrowers to borrow less. C. reduce everyone’s current consumption. D. make everyone worse off. E. None of the above.arrow_forward
- personal consumption expenditures (C) and disposable income (Y d): Year C Y d1 300 400 2 500 700 a. Compute the marginal propensity to consume. b. Compute the amount of savings for years 1 and 2. c. Compute the marginal propensity to save.arrow_forwardWhich of the following statements is most accurate? a.Most of the variation in consumption spending can be explained by changes in debt b. There is no single factor that explains much of the variation in consumption spending c. Most of the variation in consumption spending can be explained by changes in the interest rate. d. Most of the variation in consumption spending can be explained by changes in wealth e. most of the variation in consumption spending can be explained by changes in disposable income.arrow_forwardAn increase in expected future income________. Select one: A. decreases consumption expenditure B. increases saving C. shifts the consumption function upward D. shifts the saving function upwardarrow_forward
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