30. Given this diagram; what is the mpc (marginal propensity to consume? a) 4/5 b) 20 c) – 20 d) 100 e) 5

Income and consumption changes for five people are shown in the table. Given this information, rank the marginal propensities to consume (MPC) for the five people from largest to smallest. Largest MPC to Smallest MPC   Answer Bank Colin Barry Al Dan Ernest   Name Income change Consumption change Al +$10,000+$10,000 +$6,000+$6,000 Barry +$5,000+$5,000 +$1,600+$1,600 Colin +$2,000+$2,000 +$1,600+$1,600 Dan −$5,000−$5,000 −$3,500−$3,500 Ernest −$10,000−$10,000 −$4,000−$4,000

Explain the concept of the 100X Multiplier using the idea of diminishing marginal utility.

If national income increases by $20 million and consumption increases by $5 million, the marginal propensity to consume is A) 4. B) 0.75. C) 0.5. D) 0.25.

TOPIC: Consumption and Saving

1. Use the following table with information on the consumption behavior of the people of Gotham to answer the following questions: Disposable Income Consumption $300 $440 $0 $200 a. What is the value of 'a' or autonomous consumption in this economy? b. What is the value of 'b’ or the Marginal Propensity to Consume (MPC) in this economy? Interpret the meaning of this MPC value in one sentence.

The marginal propensity to consume is  a)the average amount of income that is consumed or spent b)the ratio of consumption to income c)the ratio of the change in consumption to a change in income d)the ratio of income to consumption

The marginal propensity to consume is typically   a. between -1.0 and 1.0   b. between zero and 1.0   c. equal to 1.0   d. less than zero or greater than 1.0   e. equal to zero

11:04 AM ECON 122 CAT ONE.docX Phoenix Files QUESTION ONE Is it desirable for a country to have a large gross domestic product? Explain (2 marks) QUESTION TWO You are given data on the following variables in an economy Government spending 300 Planned investment Net exports Autonomous taxes Income tax rate Marginal propensity to consume 0.5 a) Consumption (C) is 600 when income (Y) is equal to 1500. Solve for autonom ous consumption (2 ma rks) ii) 200 S 50 b) Solve for the equilibrium level of output in the following two scenarios: i) There is an income tax t=0.1, Edit 0.1 250 Q Search © | 46| 472 [ 66 c) In the economy with an income tax of 10%, what is the budget balance of the government? (2 marks) O X: × There is no income tax in the economy. Denote these two variables by Yw and YN respectively. (4 marks) d) Solve for the change in net exports that would bring the equilibrium output lev el in the economy with the income tax to the level of YN that you found in part b. specify both…

The Average Propensity to Consume is:     A. the percentage of disposable income that is consumed   B. the percentage of disposable income that is saved   C. the percentage of disposable income that is spent   D. the percentage of disposable income that is invested