EBK ECON: MACRO4
4th Edition
ISBN: 9781305562097
Author: MCEACHERN
Publisher: CENGAGE LEARNING - CONSIGNMENT
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Question
Chapter 9, Problem 1.2PA
To determine
Value of MPC, Relationship between MPC and MPS, If MPC increases, what happens to MPS,MPC related to consumption function and MPS related to saving function.
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Very briefly summarize the relationships shown by (a) the consumption schedule, (b) the saving schedule, (c) the investment demand curve, and (d) the multiplier effect. Which of these relationships are direct (positive) relationships and which are inverse (negative) relationships? Why are consumption and saving in the United States greater today than they were a decade ago?
The table shows disposable income and saving in an economy.
Calculate consumption expenditure at each level of disposable income.
Over what range of disposable income is there dissaving? Estimate the
level of disposable income at which saving is zero.
>>> Answer to 1 decimal place.
Disposable income
0
(trillions of dollars)
Saving
10
20
30
40
53--35
50
5
When disposable income is $30 trillion, consumption expenditure is $
trillion.
Calculate the Marginal Propensity to Consume and the Marginal Propensity to Save. Fill in the blanks in the following table. Show that the MPC plus the MPS equals 1.
National Income & Real GDP (Y)
Consumption (C)
Saving (S)
MPC
MPS
$9,000
$8,000
$10,000
$8,600
$11,000
$9,200
$12,000
$9,800
$13,000
$10,400
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Similar questions
- Suppose two successive levels of disposable personal income are $16 and $21 billion, respectively, and the change in consumption spending between these two levels of disposable personal income is $2 billion, then the MPC will be equal to? 0.12 0.8 0.7 0.4 0.04arrow_forwardHow is it possible for consumption expenditure to be positive even when disposable income is zero?arrow_forwardI consumed all my income at every level of income.Draw my consumption and saving function.What are my MPC and MPS? Explain why it must always be true that MPC+MPS equal to 1?arrow_forward
- Suppose that disposable income, consumption, and saving in some country are $400 billion, $350 billion, and $50 billion, respectively. Next, assume that disposable income increases by $40 billion, consumption rises by $36 billion, and saving goes up by $4 billion. Instructions: In part a, round your answers to 2 decimal places. In part b, round your answers to 3 decimal places. a. What is the economy's MPC? MPC = What is its MPS? MPS = b. What was the APC before the increase in disposable income? APC before = What was the APC after the increase? APC after =arrow_forwardAsaparrow_forwardThe 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).arrow_forward
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