EBK MACROECONOMICS
13th Edition
ISBN: 8220106847848
Author: PARKIN
Publisher: Pearson Education (US)
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Chapter 11, Problem 17APA
To determine
Illustrate the graph and explain the effect on the consumption function and saving function due to an increase in household wealth in 2017.
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The table given below reports the value of real GDP and its components consumption (C), investment (I), exports,
and imports for two consecutive years in an economy.
Table 10.3
Equilibrium Real
Exports
Imports
GDP
Year 1
$9,350
$7,500
$1,350
$1,800
Year 2
$11,450
$8,900
$2,350
$1,600
Assume that government spending is zero for this economy.
Refer to Table 10.3. Assume that the economy is at equilibrium in both years, and that government spending is zero
for this economy. The change in investment spending from year 1 to year 2 is:
$1,800.
$450.
O $945.
$214.
$2,100.
nal
U.S. Households Added $2.35 Trillion in Wealth
The Federal Reserve reported that household wealth increased by $2.35
trillion or $20.000 per household in the first quarter of 2017. This rise is the
largest since 2004. The rise came from a 5.5 percent gain in the Standard &
Poor's 500 Index and house price appreciation.
Separately, the Bureau of Economic Analysis reported that consumption
expenditure increased by $56 billion
in the first quarter of 2017
Sources: Bloomberg, June 8, 2017, and the Bureau of Economic Analysis
Draw an assumed consumption function for the last quarter of 2016 and
label it
Draw an assumed point at which consumers were in that quarter.
Draw an assumed consumption function for the first quarter of 2017 and
label it
Draw an assumed point at which consumers were in that quarter.
13.300
13.250
13.200
13.50
13,100
15,000
Consumption expenditure (bllions of 2009 dollars)
13,000-
15.000 15.050 465100 150 16.00 15.250 15.300
Disposable income (billions of 2000…
Use the figure to calculate the marginal propensity to consume (MPC) between point A and point
B.
MPC =
(Enter your response as a real number rounded to two decimal places.)
C
Real consumption spending ($ billions)
Consumption and National Income
$3,750
$2,250
B
$3,000 $5,000
Real national income or real GDP ($ billions)
C
Chapter 11 Solutions
EBK MACROECONOMICS
Ch. 11.1 - Prob. 1RQCh. 11.1 - Prob. 2RQCh. 11.1 - Prob. 3RQCh. 11.2 - Prob. 1RQCh. 11.2 - Prob. 2RQCh. 11.2 - Prob. 3RQCh. 11.2 - Prob. 4RQCh. 11.3 - Prob. 1RQCh. 11.3 - Prob. 2RQCh. 11.3 - Prob. 3RQ
Ch. 11.4 - Prob. 1RQCh. 11.4 - Prob. 2RQCh. 11.4 - Prob. 3RQCh. 11.4 - Prob. 4RQCh. 11 - Prob. 1SPACh. 11 - Prob. 2SPACh. 11 - Prob. 3SPACh. 11 - Prob. 4SPACh. 11 - Prob. 5SPACh. 11 - Prob. 6SPACh. 11 - Prob. 7SPACh. 11 - Prob. 8SPACh. 11 - Prob. 9SPACh. 11 - Prob. 10SPACh. 11 - Prob. 11SPACh. 11 - Prob. 12SPACh. 11 - Prob. 13SPACh. 11 - Prob. 14SPACh. 11 - Prob. 15APACh. 11 - Prob. 16APACh. 11 - Prob. 17APACh. 11 - Prob. 18APACh. 11 - Prob. 19APACh. 11 - Prob. 20APACh. 11 - Prob. 21APACh. 11 - Prob. 22APACh. 11 - Prob. 23APACh. 11 - Prob. 24APACh. 11 - Prob. 25APACh. 11 - Prob. 26APACh. 11 - Prob. 27APACh. 11 - Prob. 28APACh. 11 - Prob. 29APACh. 11 - Prob. 30APACh. 11 - Prob. 31APACh. 11 - Prob. 32APACh. 11 - Prob. 33APACh. 11 - Prob. 34APA
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