3. The consumption functionSuppose that national income in a country is $30 billion, taxes paid by households is $10 billion, household consumption is $18 billion, and themarginal propensity to consume (MPC) is 0.8.On the following graph, use the blue line (circle symbol) to plot the economy's consumption function.CONSUMPTION (Billions of dollars)504540353025201510500 5+++10 15 20 25 30 35 40DISPOSABLE INCOME (Billions of dollars)O $25.2 billion$26.8 billion$24.4 billion450.8,Suppose now that country's national income increases to $34 billion. Assuming the amount paid in taxes is fixed at $10 billion and that MPC =what will be the new household consumption?$21.2 billion50Consumption Function(?)

The consumption function represents the functional relationship between disposable income(Y-T) and…

3. The consumption function Suppose that national income in a country is $30 billion, taxes paid by households is $10 billion, household consumption is $18 billion, and th marginal propensity to consume (MPC) is 0.8. On the following graph, use the blue line (circle symbol) to plot the economy's consumption function. ?

3. The consumption function Suppose that national income in a country is $30 billion, taxes paid by households is $10 billion, household consumption is $18 billion, and th marginal propensity to consume (MPC) is 0.8. On the following graph, use the blue line (circle symbol) to plot the economy's consumption function. ?

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter9: Aggregate Demand

Section: Chapter Questions

Problem 1.1P

See similar textbooks

Similar questions

3. Finally, think about the following applied situation: An economist wants to estimate a line that relates personal consumption C and disposable income I. The economist interviews a few households and obtains the following data: Income Consumption (thousands of dollars) (thousands of dollars) 20 18 18 13 27 21 36 27 37 26 45 36 50 39 c) What is the interpretation of the rate of change? Clearly state the units for the slope and write a sentence explaining what the rate of change tells us in this case.
Gross Domestic Product Explain how net exports affect the US economy. Describe both positive and negative impacts on GDP. Why do national income accountants use net exports to compute GDP, rather than simply adding exports to the other expenditure components of GDP? You have the following information on 3 countries: Soccerland, Handeggland, and Neverland How long will it take until Soccerland’s GDP increases by 75%? How long will it take until Soccerland and Handeggland have the same GDP? Soccerland’s population is not happy that, eventually, Handeggland is going to have higher GDP than their country. They feel that they are a much better country, so they are going to work harder to ensure that Handeggland will never catch up with Soccerland. If Soccerland’s new growth rate is constant every year, what is the minimum growth rate that ensures that Soccerland will always have a higher GDP than Handeggland? Neverland’s ambition is to host the World Cup. At the…
Give typing answer with explanation and conclusion what is the US GDP for the first quarter and second quarter of 2021? What is the personal consumption expenditures for the first quarter and second quarter of 2021?
2. From what was learned in class, explain what the values of the slope and vertical intercept of the aggregate consumption function mean from an economic perspective. Income-expenditure equilibrium Using the data in the following table to complete the following questions. GDP YD Planned (billions of dollars) $0 $0 $200 $100 400 400 500 100 800 800 800 100 1,200 1,200 1,100 100 1,600 1,600 1,400 100 2,000 2,000 1,700 100 2,500 2,500 2,000 100 3,000 3.000 2,300 100 1. Complete the columns for AEPlanned and unplanned in the table. 2. What is the value of the MPC? 3. What is the aggregate consumption function? AE Planned Unplanned 4. What is the equation for the planned aggregate expenditure function? 4. 5. What is the value of income-expenditure equilibrium GDP, (Y*)? 6. Explain in economic terms what happens when not in the income-expenditure equilibrium? Both when GDP > AE planned and GDP < AE planned. For each situation what needs to happen to move the economy toward equilibrium?.
In the below table, C is consumption expenditure, Iis investment, G is government expenditure, and NX is the net exports. All entries are in million dollars. (SHOW THE STEPS OF CALCULATIONS) c) What is the unplanned inventory change when GDP is equal to $2200 million? d) How much is the level of savings when income is $2300 million?
Use the table below to answer the following questions. Real Consumptio GDP n $300 310 320 330 340 350 360 $290 298 306 314 322 330 338 (a) What is the size of the multiplier in this economy? Now, calculate the multiplier when the MPS is .5, .25, .10. What is the relationship between MPS and the multiplier? (b) If taxes were zero, government purchases were $10, investments $6, and net exports were zero, what is the equilibrium GDP? (c) If taxes are $5, government purchases are $10, investment is $6, and net exports are zero, what is the equilibrium GDP? (d) Assume that investment, net exports, and taxes are zero. Government purchases are $30, and the full-employment GDP without inflation is $330. How much must government spending be reduced to eliminate the inflationary expenditure gap?
Graphically illustrate the aggregate consumption and saving functions. Explain these functions with at least 200 words. You may give examples.
11 pints eBook Print References Using the graph as a reference, suppose an economy's aggregate consumption function is C= $300 billion +0.50 YD. 1,000 Consumption ($ billions per year) 900 800 700 600 500 400 300 200 100 0 45° 20000 100 100 Disposable Income ($ billions per year) 50000 billion 700 billion 800 1,100 1,000 900 Instructions: Enter your responses as a whole number. a. At what level of income do households begin to save? $ b. By how much does consumption increase when disposable income rises $100 billion beyond the level of income from part a?
ADVANCED ANALYSIS Suppose that the linear equation for consumption in a hypothetical economy is C=40+ 0.9 Y. Also suppose that income (Y) is $400. Determine the following values: Instructions: For parts a, b, d, and f, round your answers to 2 decimal places if necessary. For parts c and e, enter your answers as a whole number. a. MPC = .9 b. MPS = .1 c. Level of consumption = $ 400 d. APC = e. Level of saving = $ f. APS 이 0
In a simple economy (assume there are no taxes, thus Y is disposable income), the consumption function is C= 100 +0.75Y Investment is equal to 400. In this economy, equilibrium GDP is $ (Round your answer to the nearest dollar) 1.) Using the point drawing tool, on the graph to the right, indicate the real GDP point that you found above Label the point 'E' 2) Using the line drawing tool, carefully graph the consumption plus investment line Properly label your line Carefully follow the instructions above, and only draw the required objects
A Moving to another question will save this response. Question 12 Assume the following consumption schedule: C= 20 + 0.9 Y, where C is consumption and Yis disposable income. At $1,100 level of disposable income: (show your calculations) a. Find out the level of saving and consumption? b. How much are the APC and APS (to one decimal place)? ( c. If disposable income increased to $2,800 and saving is $345 now. What are MPC and MPS (to two decimal places)? For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac). BIUS Paragraph Arial 10pt A V 血 x² X2 深| T [区田田田E图|言()
Assume the following consumption schedule: C= 20 + 0.9 Y, where C is consumption and Y is disposable income. At $1,100 level of disposable income: (show your cacuators) a. Find out the level of saving and consumption? b. How much are the APC and APS (to one decimal place)? c. If dispr able income increased to $2,800 and saving is $345 now. What are MPC and MPŚ (to two decimal places)?