Microeconomic Theory
12th Edition
ISBN: 9781337517942
Author: NICHOLSON
Publisher: Cengage
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Chapter 2, Problem 2.3P
To determine
The maximum value for the function
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Chapter 2 Solutions
Microeconomic Theory
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- Calculate the value of MPC if the multiplier is given to be as 1.4arrow_forwardConsider the hypothetical country of Kejimkujik. Suppose that national income in Kejimkujik is $300 billion, households pay $100 billion in taxes, household consumption is equal to $160 billion, and the marginal propensity to consume (MPC) is 0.6. On the following graph, use the blue line (circle symbol) to plot the economy's consumption function. Consumption Function050100150200250300350400450500500450400350300250200150100500CONSUMPTION (Billions of dollars)DISPOSABLE INCOME (Billions of dollars) Suppose now that Kejimkujik’s national income increases to $330 billion. Assuming the amount paid in taxes is fixed at $100 billion and that MPC = 0.6, what is the new amount of household consumption? $148 billion $219.4 billion $220.6 billion $178 billionarrow_forwardFind the value of multiplier when MPC is equals to 0.70arrow_forward
- Complete the statements and then calculate the change in consumption. Options: disposable income marginal propensity to save. marginal propensity to consume. saving. wealth. The consumption function shows the relationship between consumption spending and ______ The slope of the consumption function is the______ Changes in consumption can be predicted by multiplying the change in ______ by the _______ If the MPC=0.80MPC=0.80 and disposable income increases by $1000$1000, then consumption will increase by what amount? Assume that there is no multiplier effect.arrow_forwardConstruct a consumption function from the data given here and determine the MPC. Given the consumption function in the above question, what is the relationship between disposable income and consumption?arrow_forwardThe multiplier in the Keysian model equalsarrow_forward
- If the MPC is 0.67, then the oversimplified multiplier is Group of answer choices A)7.60. B)6.70. C)3.00. D)33arrow_forwardIf the investment multiplicator equals 1, it means that: Select one alternative: MPC = 2 MPC (Marginal Propensity to Consume) = 1 MPC = 0arrow_forwardConstruct a consumption function from the data given here and determine the MPC. Given the consumption function in the above question, what is the relationship between disposable income and consumption? Is it direct or indirect and then explain what it means.arrow_forward
- The simple multiplier is: a) consumption spending divided by saving. b) one divided by one minus the marginal propensity to consume. c) one plus the marginal propensity to consume. d) one divided by one plus the marginal propensity to consume. e) the MPC.arrow_forwardGive an example of any factor that influence the size of the multiplierarrow_forwardSuppose the MPC is .6 and consumption increases by $8 billion. Consequently, total income through the multiplier effect will: $8 billion $13.3 billion $15 billion $20 billion How do I calculate this?arrow_forward
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