Consider a hypothetical economy in which the marginal propensity to consume (MPC) is 0.60. That is, if disposable income increases by $1,consumption increases by 60¢.Suppose further that last year disposable income in the economy was $450 billion and consumption was $400 billion.On the following graph, use the blue line (circle symbol) to plot this economy's consumption function based on these data.CONSUMPTION (Billions of dollars)7006005004003002001000-1000100200300400500600DISPOSABLE INCOME (Billions of dollars)700800?From the preceding data, you know that the level of savings in the economy last year was $economy isbillion and the marginal propensity to save in thisSuppose that this year, disposable income is projected to be $550 billion. Based on your analysis, you would expect consumption to be $billion and savings to be $billion.

Marginal propensity to consume is the proportion of an increase in income that is spent on…

Consider a hypothetical economy in which the marginal propensity to consume (MPC) is 0.60. That is, if disposable income increases by $1, consumption increases by 60¢. Suppose further that last year disposable income in the economy was $450 billion and consumption was $400 billion. On the following graph, use the blue line (circle symbol) to plot this economy's consumption function based on these data. CONSUMPTION (Billions of dollars) 700 600 8 500 400 300 200 100 0 -100 0 100 200 300 400 500 600 700 800 DISPOSABLE INCOME (Billions of dollars) From the preceding data, you know that the level of savings in the economy last year was S economy is billion and the marginal propensity to save in this Suppose that this year, disposable income is projected to be $550 billion. Based on your analysis, you would expect consumption to be S billion and savings to be $ billion.

Consider a hypothetical economy in which the marginal propensity to consume (MPC) is 0.60. That is, if disposable income increases by $1, consumption increases by 60¢. Suppose further that last year disposable income in the economy was $450 billion and consumption was $400 billion. On the following graph, use the blue line (circle symbol) to plot this economy's consumption function based on these data. CONSUMPTION (Billions of dollars) 700 600 8 500 400 300 200 100 0 -100 0 100 200 300 400 500 600 700 800 DISPOSABLE INCOME (Billions of dollars) From the preceding data, you know that the level of savings in the economy last year was S economy is billion and the marginal propensity to save in this Suppose that this year, disposable income is projected to be $550 billion. Based on your analysis, you would expect consumption to be S billion and savings to be $ billion.

MACROECONOMICS FOR TODAY

10th Edition

ISBN:9781337613057

Author:Tucker

Publisher:Tucker

Chapter8: The Keynesian Model

Section: Chapter Questions

Problem 6SQ

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