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Economics:

10th Edition
BOYES + 1 other
ISBN: 9781285859460

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Chapter
Section
BuyFindarrow_forward

Economics:

10th Edition
BOYES + 1 other
ISBN: 9781285859460
Textbook Problem

What is the marginal propensity to consume if :

a. Consumption increases by $75 when disposable income rises by $100?

b. Consumption falls by $50 when disposable income falls by $100?

c. Saving equals $20 when disposable income equals $100 and saving equals $40 when disposable income equals $300?

To determine

(a)

To write:

Disposable income rises by $100, and consumption by $75. The value of marginal propensity to consume.

Explanation

Marginal propensity to consume = change in consump...

To determine

(b)

To write:

Disposable income falls by $100 and consumption falls be $50. The value of marginal propensity to consume.

To determine

(c)

To write:

Savings is $20 when disposable income is $100; savings is $40 when disposable income is $300. The value of marginal propensity to consume.

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