Foundations of Economics (8th Edition)
8th Edition
ISBN: 9780134486819
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 30, Problem 2IAPA
To determine
To calculate:
The amount of saving at each level of disposable income, the range of disposable income does consumption expenditure exceeds disposable income and the level of autonomous consumption expenditure.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
The following table shows data for the economy before the decrease in saving. Suppose that the decrease in saving causes consumption to rise from $280 million to $320 million. Assume Say's law holds in this economy.
Fill in the data for the economy after the decrease in saving.
Before Saving Decrease
After Saving Decrease
Consumption (C)
$280 million
$320 million
Investment (I)
$200 million
$
million
Government Purchases (G)
$250 million
$
million
Exports (EX)
$500 million
$500 million
Imports (IM)
$300 million
$300 million
As a result of the decrease in saving, total expenditures will .
1.12 Study the following diagram and answer the question that follows.
Expenditures
(billions of dollars per year)
> >
3500
3000
2500
2000
1500
1000
500
Figure 9.1
500 1000 1500 2000 2500 3000 3500
Income
(billions of dollars per yazari
At an income level of $2,000 billion,
a) Consumption equals $1,500 billion.
b) Saving equals $0.
c) The MPC equals 0.80.
d) There is dissaving.
F
뉴
C
connex
(a) Explain the difference between induced consumption expenditure and autonomous consumption expenditure. Why is not all consumption expenditure induced expenditure?
（b） How is it possible for households to have a negative savings rate and what has caused this negative household savings rate? Is this negative household savings rate sustainable in the long run?
Chapter 30 Solutions
Foundations of Economics (8th Edition)
Ch. 30 - Prob. 1SPPACh. 30 - Prob. 2SPPACh. 30 - Prob. 3SPPACh. 30 - Prob. 4SPPACh. 30 - Prob. 5SPPACh. 30 - Prob. 6SPPACh. 30 - Prob. 7SPPACh. 30 - Prob. 8SPPACh. 30 - Prob. 9SPPACh. 30 - Prob. 1IAPA
Ch. 30 - Prob. 2IAPACh. 30 - Prob. 3IAPACh. 30 - Prob. 4IAPACh. 30 - Prob. 5IAPACh. 30 - Prob. 6IAPACh. 30 - Prob. 7IAPACh. 30 - Prob. 8IAPACh. 30 - Prob. 9IAPACh. 30 - Prob. 10IAPACh. 30 - Prob. 1MCQCh. 30 - Prob. 2MCQCh. 30 - Prob. 3MCQCh. 30 - Prob. 4MCQCh. 30 - Prob. 5MCQCh. 30 - Prob. 6MCQCh. 30 - Prob. 7MCQCh. 30 - Prob. 8MCQ
Knowledge Booster
Similar questions
- U.S. business inventories increase Business inventories in the United States rose 0.4% in July after no change in the prior month. An increase in inventories adds to gross domestic product while a decrease subtracts from it. Source: U.S. Department of Commerce, September 13, 2019 Explain why an increase in inventories adds to gross domestic product but why it matters whether an increase in inventories is planned or unplanned. A planned increase in inventories _______. A. decreases investment, which decreases equilibrium expenditure and real GDP B. increases investment, which increases equilibrium expenditure and real GDP C. shifts the AE curve upward, so firms decrease production and real GDP decreases to reach equilibrium expenditure D. shifts the AE curve downward, so firms decrease production and real GDP decreases E. increases consumption expenditure, which increases equilibrium expenditure and real GDP An unplanned increase…arrow_forwardIf consumption expenditure is $3100 and savings is $1800 Calculate incomearrow_forward1. The positive relationship between consumption expenditure and disposable income can be shown by a positive slope of consumption curve. Answer: Reason: O Accessibility: Investigate hparrow_forward
- A Moving to another question will save this response. Question 12 Assume the following consumption schedule: C= 20 + 0.9 Y, where C is consumption and Yis disposable income. At $1,100 level of disposable income: (show your calculations) a. Find out the level of saving and consumption? b. How much are the APC and APS (to one decimal place)? ( c. If disposable income increased to $2,800 and saving is $345 now. What are MPC and MPS (to two decimal places)? For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac). BIUS Paragraph Arial 10pt A V 血 x² X2 深| T [区 田田 田E图|言()arrow_forward1. Given the following table. Income (RM million) Consumption (RM million 0. 100 100 150 200 200 300 250 400 300 500 350 a. How much is the autonomous consumption in the economy? b. How much investment should be increased to achieve an income of RM400 million? c. Calculate the MPS. d. Derive the consumption function.arrow_forwardWhat is the equilibrium in this economy? Planned Change in Net Exports (NX) Aggregate Expenditures (AE) Government Real GDP (Y) Consumption (C) Investment (1')| Purchases (G) Inventories 1500 1100 250 1600 1175 100 1700 1250 1800 1900 2000 75 Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a 1500 b 1600 1700 d. 1800arrow_forward
- Assume the following consumption schedule: C= 20 + 0.9 Y, where C is consumption and Y is disposable income. At $1,100 level of disposable income: (show your cacuators) a. Find out the level of saving and consumption? b. How much are the APC and APS (to one decimal place)? c. If dispr able income increased to $2,800 and saving is $345 now. What are MPC and MPŚ (to two decimal places)?arrow_forwardUse the data provided in the consumption schedule below for the nation of Nevets to answer the following questions. Disposable income (Billions of 2012 dollars) Consumption Expenditure (billions of 2012 dollars) 0 90 100 160 200 230 300 300 400 370 500 420 Which of the following is a CORRECT statement? Explain why.1. There are dis-savings at income levels of 400 and 500 billion dollars.2. The break-even level of income is 400 billion dollars. 3. Savings of 30 billion occurs at an income level of 200 billion dollarsarrow_forwardAutonomous consumption is: A. the level of consumption when disposable income is more that $40,000 a year B. the level of consumption when disposable income is 0 C. the level of consumption when all disposable income is saved D. the level of consumption when disposable income variesarrow_forward
- Disposable income is the amount a household has A after subtracting autonomous spending. B after subtracting taxes and transfer payments to income. C sometimes called discretionary spending. D available for consumption spending and saving.arrow_forwardSaving = a. disposable income minus taxes b. income minus taxes c. 1 – MPC d. disposable income minus consumptionarrow_forwardClassify each of the following items as a final good or service or an intermediate good or service, and identify which is a component of consumption expenditure, investment, or government expenditure on goods and services. A. A new limousine for the president B. A DVD bought by a household C. Steel sheets bought by General Motors D. A new apartment building O 1. Ais a final good that is government expenditure, B is a final good that is consumption expenditure, C is an intermediate good, and D is a final good that is investment. O 2. A is an intermediate good, B is a final good that is investment, C is an intermediate good, and D is a final good that is investment. O 3. Ais a final good that is government expenditure, B is a final good that is consumption expenditure, Cis a final good that is consumption expenditure, and D is a final good that is consumption expenditure. O 4. Ais an intermediate good, B is a final good that is consumption expenditure, C is an intermediate good, and D is…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
