Economics: Principles & Policy
Economics: Principles & Policy
14th Edition
ISBN: 9781337696326
Author: William J. Baumol; Alan S. Blinder; John L. Solow
Publisher: Cengage Learning
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Chapter 24, Problem 4TY
To determine

A shift in consumption function.

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If the price level increases, what happens to the consumption function? Why?
Use the diagram below to answer the question  If the marginal propensity to consume increases A. the consumption function will shift parallel upwards. B. there will be a movement from left to right along the consumption function. C. the consumption function will shift parallel downwards. D. the slope of the consumption function will be steeper.
Explain what the consumption function shows, and describe what is held constant along the consumption function. Describe what happens when firms and workers underestimate future prices in the economy. Focus your answer on what would happen to actual output as opposed to the expected potential output.

Chapter 24 Solutions

Economics: Principles & Policy

Ch. 24.A - Prob. 1DQCh. 24.A - Prob. 2DQCh. 24.A - Prob. 3DQCh. 24.A - Prob. 1TYCh. 24.A - Prob. 2TYCh. 24.A - Prob. 3TYCh. 24 - Prob. 1DQCh. 24 - Prob. 2DQCh. 24 - Prob. 3DQCh. 24 - Prob. 4DQ
Ch. 24 - Prob. 5DQCh. 24 - Prob. 6DQCh. 24 - Prob. 7DQCh. 24 - Prob. 8DQCh. 24 - Prob. 1TYCh. 24 - Prob. 2TYCh. 24 - Prob. 3TYCh. 24 - Prob. 4TY
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