In an economy income increases by 10,000 as a result of a rise in investmen expenditure by 1,000. Calculate: (a) Investment Multiplier (b) Marginal Propensity to Consume
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- 6. The marginal propensity to consume is: A) the change in consumption divided by the change in income. B) consumption divided by income. C) the change in consumption divided by the change in saving. D) The change in saving divided by the change in income.18. What will be the level of consumption spending at an income level of 36? a) 30 b) 24 c) 28 d) 16 e) 81. The positive relationship between consumption expenditure and disposable income can be shown by a positive slope of consumption curve. Answer: Reason: O Accessibility: Investigate hp
- 6. How will the following situations affect the investment demand curve? (a) Unplanned inventories rise to new highs. (b) A firm decides to increase its current inventory levels.1. The marginal propensity to consume is:A) the change in consumption divided by the change in income.B) consumption divided by income.C) the change in consumption divided by the change in saving.D) The change in saving divided by the change in income.Find the value of change in income if change in investment is $200 and Multiplier is 6
- 6. Use the following data to work Problems (a), (b), and (c). You are given the information in the table about the economy of Australia. Disposable income Saving (billions of dollars per year) -5 100 20 200 45 300 70 400 95 a. Calculate the marginal propensity to save. b. Calculate consumption at each level of disposable income. c. Calculate the marginal propensity to consume.500 1,000 Aggregate output, Y (billions of dollars) Figure 8.1 Refer to Figure 8.1. An increase in the MPC Select one: Oa shifts the saving function downward. Ob.makes the caving function fatte Oashifts the consumption function upard. .2.makes the consumption function fatter) billions of dollars)What is the marginal propensity to consume in this economy? Planned Government Net Exports Aggregate Change in Real GDP (Y) Consumption (C) Investment (1') Purchases (G) (NX) Expenditures (AE) Inventories 1500 1100 250 1600 1175 100 1700 1250 1800 1900 2000 75 Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a 0.65 0.75 0.85 d. 0.95
- Find the value of change in investment if the value of multiplier is 5 and the change in national income is $1000 millionThe multiplier process can occur when a decrease in investment spending… a) Increases household saving, causing consumers to buy more goods and services.b) Reduces household incomes, causing consumers to buy fewer goods and services.c) Increases household incomes, causing consumers to buy fewer goods and services.d) Reduces household incomes, causing consumers to buy more goods and services3. Suppose that you are a consumption smoother. You expect to live for another 28 years. You just learned that you will receive a permanent raise at your job of $1560. Answer the following: (a) How much extra do you consume this year? (b) What is your marginal propensity to consume out of this income change?
