Suppose that consumption equals $500 billion when disposable income is $0 and that each increase of $100 billion in disposable income causes consumption to increase by $70 billion. Draw a graph of consumption function using this information. What is the slope of the consumption function?
Suppose that consumption equals $500 billion when disposable income is $0 and that each increase of $100 billion in disposable income causes consumption to increase by $70 billion. Draw a graph of consumption function using this information. What is the slope of the consumption function?
Chapter9: Aggregate Demand
Section: Chapter Questions
Problem 1.3P
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Suppose that consumption equals $500 billion when disposable income is $0 and that each increase of $100 billion in disposable income causes consumption to increase by $70 billion. Draw a graph of consumption function using this information. What is the slope of the consumption function?
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according to the life-cycle hypothesis, what is the typical pattern of saving and spending for an individual over his or her lifetime? What impact does this pattern have on the saving rate in the overall economy?
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