ECO 2302 PRIN MACO W/MYECO ACC >IP<
4th Edition
ISBN: 9781323504161
Author: CASE
Publisher: PEARSON C
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Question
Chapter 8, Problem 1.4P
To determine
Aggregate consumption, consumption and saving function and
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Assume in a simple economy that the level of saving is –500 when aggregate output equals zero and that the marginal propensity to save is 0.2. Derive the saving function and the consumption function, and draw a graph showing these functions. At what level of aggregate output does the consumption curve cross the 45° line? Explain your answer and show this on the graph.
Construct 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.
Chapter 8 Solutions
ECO 2302 PRIN MACO W/MYECO ACC >IP<
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