MACROECONOMICS FOR TODAY
10th Edition
ISBN: 9781337613057
Author: Tucker
Publisher: CENGAGE L
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Question
Chapter 8, Problem 7SQ
To determine
The implication of one dollar increase in disposable income and less than one dollar increase in consumption.
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Based on the above graph, which of the following is wrong?
Select one:
a. Saving is inversely (negatively) related to disposable income.
b. The marginal propensity to consume is constant at all levels of income and it is equal to the slope of the consumption schedule.
c. The marginal propensity to save rises as disposable income rises.
d. When consumption equals disposable income saving must be zero.
If the marginal propensity to save is 0.25,
a. The marginal propensity to consume (MPC) is
b. The multiplier is
The following table shows income and consumption. Calculate:
A- Saving (S),
B- Marginal propensity to consume (MPC),
C- Marginal propensity to save (MPS),
D- Average propensity to consume (APC),
E- Average propensity to save (APS).
(show your calculations, write the answers to 2 decimal places)
Y
C
S
MPC
MPS
APC
APS
S =
MPC =
MPS =
APC =
APS =
300
360
410
400
600
510
800
250
1050
0.32
Chapter 8 Solutions
MACROECONOMICS FOR TODAY
Ch. 8.4 - Prob. 1YTECh. 8 - Prob. 1SQPCh. 8 - Prob. 2SQPCh. 8 - Prob. 3SQPCh. 8 - Prob. 4SQPCh. 8 - Prob. 5SQPCh. 8 - Prob. 6SQPCh. 8 - Prob. 7SQPCh. 8 - Prob. 8SQPCh. 8 - Prob. 9SQP
Ch. 8 - Prob. 1SQCh. 8 - Prob. 2SQCh. 8 - Prob. 3SQCh. 8 - Prob. 4SQCh. 8 - Prob. 5SQCh. 8 - Prob. 6SQCh. 8 - Prob. 7SQCh. 8 - Prob. 8SQCh. 8 - Prob. 9SQCh. 8 - Prob. 10SQCh. 8 - Prob. 11SQCh. 8 - Prob. 12SQCh. 8 - Prob. 13SQCh. 8 - Prob. 14SQCh. 8 - Prob. 15SQCh. 8 - Prob. 16SQCh. 8 - Prob. 17SQCh. 8 - Prob. 18SQCh. 8 - Prob. 19SQCh. 8 - Prob. 20SQ
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Similar questions
- In 2009, the US Federal government cut taxes by approximately $300 billion, increased government spending by approximately $300 billion, and increased transfer payments by approximately $200 billion. Answer the following questions, assuming the marginal propensity to consume was 0.75. What was the maximum change in GDP from the government spending? Show your work.arrow_forwardIn the table below, there are no taxes (so that that real GDP equals disposable income) and no imports or exports. If real GDP decreases from $6,000 to $5,000, the marginal propensity to consume is Real Consumption GDP expenditure (dollars) (dollars) 3,000 2,500 4,000 3,250 5,000 4,000 6,000 4,750 7,000 8,000 5,500 6,250 a. 0.75. b. -750. C. 0.80. d. -0.75. Investment (dollars) 500 500 500 500 500 Government expenditure (dollars) 500 500 500 500 500 500 500arrow_forwardA) What is the value of the marginal propensity to consume? ( Round your answers to one decimal place). What is the value of the marginal propensity to save? B) What is the break-even level of income in the table? (Enter your answer as a whole number) What is the term that economists use for the saving situation shown at the $ 240 level of income. C) For each of the following items, indicate wheter the value in the table is either constant or variable as income changes: The MPS is (constant/ variable) as income changes. The APC is ( constant/ variable) as income changes. The MPC is ( constant/ variable) as income changes. The APS is (constant/ variable) as income chnages.arrow_forward
- Calculate the Marginal Propensity to Consume and the Marginal Propensity to Save. Fill in the blanks in the following table. Show that the MPC plus the MPS equals 1. National Income & Real GDP (Y) Consumption (C) Saving (S) MPC MPS $9,000 $8,000 $10,000 $8,600 $11,000 $9,200 $12,000 $9,800 $13,000 $10,400arrow_forwardA flatter aggregate consumption function, if plotted on a graph with output on the horizontal axis and aggregate consumption on the vertical axis, would indicate which of the following: Select one: a. A smaller marginal propensity to consume and a larger multiplier. b. A larger marginal propensity to consume and a larger multiplier. c. A smaller marginal propensity to consume and a smaller multiplier. d. A smaller marginal propensity to save (MPS = 1 - MPC) and a smaller multiplier. Clear my choicearrow_forwardThe marginal propensity to consume is is .3 find the marginal propensity to save.arrow_forward
- 1.3. What is the value of marginal propensity to consume (mpc)? What does it mean?arrow_forwardThe multiplier effect represents Keynes’s insight that:(a) households would rather spend than save.(b) businesses prefer to be in the expansion phase of the business cycle.(c) an increase in spending will increase equilibrium income by more than the initial increase in spending.(d) an increase in equilibrium income will increase the marginal propensity to consume.arrow_forwardExplain why the marginal propensity to save and the marginal propensity to consume sum to 1.arrow_forward
- Fill in the blanks: Suppose when disposable personal income increases from $1,000 to $1,500, consumption increases from $900 to $1,200. In this case, the marginal propensity to consume is personal saving v by $ v and the marginal propensity to save isarrow_forwardStudy the scenario and complete the question(s) that follow(s): Silesia You are provided with the following information about an imaginary economy called Silesia. Use the information provided in the table to answer the questions below. Government expenditure 400 Exports 250 Autonomous imports 50 Autonomous consumption 150 Investment Expenditure 300 Full-employment output 2040 Marginal propensity to consume 0.75 Marginal propensity to import 0.15 Таx rate 0.25 5.1 Derive and calculate the consumption function for the data provided. Show all formulas and calculations used. 5.2 Calculate autonomous spending. Show all formulas and calculations used. 5.3 Calculate the multiplier. Show all formulas and calculations used. Round off your final answer to 1 decimal. 5.4 Calculate the equilibrium level of income, using the values calculated in 5.2 and 5.3 above. Show all formulas and calculations used. 5.5 Calculate the government surplus or deficit at the equilibrium level of income. Show all…arrow_forwardThe marginal propensity to save is defined as the 1-MPC, where MPC is marginal propensity to consume. Then marginal propensity to save can be of any positive value. Discuss the argument stated above.arrow_forward
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