MyLab Economics with Pearson eText -- Access Card -- for Foundations of Economics
8th Edition
ISBN: 9780134518312
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
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Question
Chapter 30, Problem 2SPPA
To determine
To explain:
The marginal propensity to consume (MPC) and to identify the change in consumption functions if wealth increases by $10 trillion.
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Students have asked these similar questions
Q-1 The following table shows income and consumption:
Calculate:
A- Saving (S),
B- Marginal propensity to consume (MPC),
C-Marginal propensity to save (MPS),
D- Average propensity to consume (APC)
E- Average propensity to save (APS).
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.
Investment = 450
Consumption = 700 + 0.7Yd
Government expenditure= 500
Taxes = 350
Export = 400
Import = 300
(All values are in RM million)
Based on the information, answer the following question
Find the value of marginal propensity to consume (MPC) & marginal propensity to save (MPS).
Derive the saving function
Calculate the equilibrium income level using the aggregate expenditure – aggregate supply approach
Sketch the equilibrium income using the aggregate expenditure-aggregate supply approach without scale.
Chapter 30 Solutions
MyLab Economics with Pearson eText -- Access Card -- for Foundations of Economics
Ch. 30 - Prob. 1SPPACh. 30 - Prob. 2SPPACh. 30 - Prob. 3SPPACh. 30 - Prob. 4SPPACh. 30 - Prob. 5SPPACh. 30 - Prob. 6SPPACh. 30 - Prob. 7SPPACh. 30 - Prob. 8SPPACh. 30 - Prob. 9SPPACh. 30 - Prob. 1IAPA
Ch. 30 - Prob. 2IAPACh. 30 - Prob. 3IAPACh. 30 - Prob. 4IAPACh. 30 - Prob. 5IAPACh. 30 - Prob. 6IAPACh. 30 - Prob. 7IAPACh. 30 - Prob. 8IAPACh. 30 - Prob. 9IAPACh. 30 - Prob. 10IAPACh. 30 - Prob. 1MCQCh. 30 - Prob. 2MCQCh. 30 - Prob. 3MCQCh. 30 - Prob. 4MCQCh. 30 - Prob. 5MCQCh. 30 - Prob. 6MCQCh. 30 - Prob. 7MCQCh. 30 - Prob. 8MCQ
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- In the economy of Spendsalot, the marginal propensity to save, MPS, is 0.8. What is the marginal propensity to consume, MPC, for Spendsalot? Which value does MPC determine? a.the slope of tax revenues as a function of GDP b.the slope of pre‑tax consumption as a function of GDP c.the slope of pre‑tax investment as a function of GDP d.the slope of government consumption as a function of GDP.arrow_forwardMCQ The table below provides income and consumption data in billions of dollars: Disposable Income Consumption Savings 100 80 --- 200 150 --- Calculate the marginal propensity to consume for the economy. A) 0.8 B) 0.2 C) 0.3 D) 0.7arrow_forwardSuppose disposable income increases by $2,000$2,000. As a result, consumption increases by $1,500$1,500. Answer the questions based on this information. Where appropriate, enter your answer as a decimal rather than as a percentage. 1) The increase in savings resulting directly from this change in income is 2)The marginal propensity to save (MPS) is 3)The marginal propensity to consume (MPC) isarrow_forward
- Question 1. The table below provides income and consumption data in billions of dollars:Disposable Income Consumption Savings 100 80 --- 200 150 --- Calculate the marginal propensity to consume for the economy.A) 0.8B) 0.2C) 0.3D) 0.7arrow_forward2. The marginal propensity to save is 0.15, the marginal propensity to consume:(A) is 1.15. (B) is 0.85. (C) is 0.15. (D) cannot be determined by the given information.arrow_forwardQuestion 1: You are given the data concerning Freedonia, a legendary country i. C = 200 + 0.8Y ii. I = 100 a) What is the MPC to consume and what is the MPS? b) Solve for equilibrium income. c) Suppose I changes to 110, what is the new equilibrium level of income? By how much does a $10 increase in planned investment changes equilibrium income? What is the value of multiplier?arrow_forward
- 1.The marginal propensity to consume in this economy is 2.The equilibrium level of output in this economy isarrow_forwardIf aggregate expenditures increase by $12 billion and equilibrium GDP consequently increases by $48 billion, then the marginal propensity to save in the economy must be: MPC= change in consumption/ change in income so MPC=12/48 or .25 So the MPS is .75 Is this correct?arrow_forwardGiven the following information: C = 10,000 + 0.60Yd Ip = 110,000 G = 60,000 M = 20,000 X = 15,000 T = 4,000 + 0.02 Y Find: 1. The marginal propensity to save 2. The Autonomous Planned Expenditure (AP) 3. The equilibrium income levelarrow_forward
- Suppose that the level of government spending increased by $100 billion where the marginal propensity to consume is 0.5. Aggregate expenditures must have increased by:arrow_forward1.a)Draw an A.D/A.S graph showing inflationary gap. b)Draw an A.D/A.S graph showing a recessionary gap. c)Using the same graphs you have drawn in A and B, show what the long run equilibrium position would be in each case if the government did nothing(i.e.,let the economy self-adjust) 2.Explain how savings function is derived from the consumption function, and how the saving schedule and graph of the saving function are constructedarrow_forwardAssume that the marginal propensity to consume is 0.75. The government wishes to increase the equilibrium gross domestic product by $100 million. This can be achieved either by increasing government spending or decreasing taxes. Calculate the multiplier effect and necessary increase in government spending?arrow_forward
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