Instructions: If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers. b. What is the economic meaning of b? MPC What is the economic meaning of (1- b)? MPS c. Suppose that the amount of saving that occurs at each level of national income falls by $20 but that the values of b and (1-b) remain unchanged. Restate the saving and consumption equations inserting the new numerical values. C-O'OY

Instructions: If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers. b. What is the economic meaning of b? MPC What is the economic meaning of (1- b)? MPS c. Suppose that the amount of saving that occurs at each level of national income falls by $20 but that the values of b and (1-b) remain unchanged. Restate the saving and consumption equations inserting the new numerical values. C-O'OY

Economics For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

Chapter1: Introducing The Economic Way Of Thinking

Section1.A: Applying Graphs To Economics

Problem 20SQ

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Suppose that Y=MX+b, where Y=consumption, b=consumption at zero income, M=slope, and X=income(i) Are Y and X positively related or are they negatively related?(ii) If graphed, would the curve for this equation slope upward or slope downward?(iii) Are the variables Y and X inversely related or directly related?(iv) What is the value of Y if b=10, M=.50, and X=200?(v) What is the value of X if Y=100, b=10, and M=.25?
. This question repeats the exercise of Study Exercise 12, but for spe- cific numerical values. The equations of the model are C = 50 +0.7YD T = (0.2)Y I = 75 X = 50 G = 100 IM = (0.15)Y i a. Compute the AE function and plot it in a diagram. What is to- tal autonomous expenditure? b. What is the slope of the AE function? c. Compute the equilibrium level of national income. d. Suppose X rises from 50 to 100. How does this affect the level of national income? e. What is the simple multiplier in this model?
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