Compare the ultimate effects of an increase in interest rates in an economy with a low marginal propensity to consume with those in an economy that has a larger marginal propensity to consume? Explain

True or false: The slope of the consumption function is the marginal propensity to consume (MPC). Assume the marginal propensity to consume (MPC) is .8. Suppose real disposable income increases by $1000. Solve for the change in consumption. Assume again that the marginal propensity to consume (MPC) is .8. What must be the marginal propensity to save (MPS)? Assume that the marginal propensity to consume (MPC) is .9. Solve for the value of the "simple spending multiplier." Using the value of MPC and the value of the "simple spending multiplier" in question 10, introduce an increase in investment of $1000. Solve for the change in real GDP that results.

The value of marginal propensity to consume is 0.44 Calculate the value of Marginal propensity to save?

Consider a hypothetical economy where there are no taxes and no foreign trade, and households spend $0.90 of each additional dollar they earn and ; the marginal propensity to save (MPS) for this save the remaining $0.10. The marginal propensity to consume (MPC) for this economy is economy is ; and the multiplier for this economy is Suppose investment spending in this economy decreases by $150 billion. The decrease in investment will lead to a decrease in income, generating a decrease in consumption that decreases income yet again, and so on. Fill in the following table to show the impact of the change in investment spending on the first two rounds of consumption spending and, eventually, on total output and income. Hint: Be sure to enter a negative sign in front of the number if there is a decrease in consumption. Change in Investment Spending = -$150 billion First Change in Consumption = $ Second Change in Consumption $ Total Change in Output = $ billion billion billion In reality,…