3. The consumption function Suppose that national income in a country is $30 billion, taxes paid by households are $12 billion, household consumption is $16 billion, and the marginal propensity to consume (MPC) is 0.7. On the following graph, use the blue line (circle symbol) to plot the economy's consumption function. CONSUMPTION (Billions of dollars) 50 45 40 35 30 25 20 15 10 5 0 05 10 15 20 25 30 35 40 45 50 DISPOSABLE INCOME (Billions of dollars) Consumption Function ? Suppose now that country's national income increases to $35 billion. Assuming the amount paid in taxes is fixed at $12 billion and that MPC = 0.7, what will be the new household consumption? $23.7 billion $19.5 billion $22.3 billion $21.6 billion Grade It Now Save & Continue Continu
3. The consumption function Suppose that national income in a country is $30 billion, taxes paid by households are $12 billion, household consumption is $16 billion, and the marginal propensity to consume (MPC) is 0.7. On the following graph, use the blue line (circle symbol) to plot the economy's consumption function. CONSUMPTION (Billions of dollars) 50 45 40 35 30 25 20 15 10 5 0 05 10 15 20 25 30 35 40 45 50 DISPOSABLE INCOME (Billions of dollars) Consumption Function ? Suppose now that country's national income increases to $35 billion. Assuming the amount paid in taxes is fixed at $12 billion and that MPC = 0.7, what will be the new household consumption? $23.7 billion $19.5 billion $22.3 billion $21.6 billion Grade It Now Save & Continue Continu
Chapter9: Aggregate Demand
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Transcribed Image Text:3. The consumption function
Suppose that national income in a country is $30 billion, taxes paid by households are $12 billion, household consumption is $16 billion, and the
marginal propensity to consume (MPC) is 0.7.
On the following graph, use the blue line (circle symbol) to plot the economy's consumption function.
CONSUMPTION (Billions of dollars)
50
45
40
35
30
25
20
15
10
5
0
05
10
15
20
25
30
35
40
45
50
DISPOSABLE INCOME (Billions of dollars)
Consumption Function
?
Transcribed Image Text:Suppose now that country's national income increases to $35 billion. Assuming the amount paid in taxes is fixed at $12 billion and that MPC = 0.7,
what will be the new household consumption?
$23.7 billion
$19.5 billion
$22.3 billion
$21.6 billion
Grade It Now
Save & Continue
Continu
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