Economics1. Graphing the consumption function from the MPCConsider a hypothetical economy in which the marginal propensity to consume (MPC) is 0.75. That is, if disposable income increases by $1,consumption increases by 75c.Suppose further that last year disposable income in the economy was $500 billion and consumption was $400 billion.On the following graph, use the blue line (aircle symbol) to plot this economy's consumption function based on these data.700600300-100300400500600700100200DISPOSABLE INCOME (Blions of dotani)From the preceding data, you know that the level of savings in the economy last vear was sbillion and the marginal propensity to save in thiseconomy isSuppose that this year, disposable income is projected to be $700 billion. Based on your analysis, you would expect consumption to be Sbillion and savings to be sbillion,CONSUMPTION (Blions of dolars)

Consumption function= C0 + bY where; C0= Autonomous Consumption b= Marginal propensity to consume…

1. Graphing the consumption function from the MPC Consider a hypothetical economy in which the marginal propensity to consume (MPC) is 0.75. That is, if disposable income increases by $1. consumption increases by 75c. Suppose further that last year disposable income in the economy was $500 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. 700 600 500 400 300 200 100 -100 400 500 400 700 100 200 300 DISPOSABLE INCOME (Blons of dotan) From the preceding data, you know that the level of savings in the economy last year wass billion and the marginal propensity to save in this economy is Suppose that this year, disposable income is projected to be $700 billion. Based on yoor analysis, you would expect consumption to bes billion and savings to be S billion. CONSUMPTION (Blions of dolars)

1. Graphing the consumption function from the MPC Consider a hypothetical economy in which the marginal propensity to consume (MPC) is 0.75. That is, if disposable income increases by $1. consumption increases by 75c. Suppose further that last year disposable income in the economy was $500 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. 700 600 500 400 300 200 100 -100 400 500 400 700 100 200 300 DISPOSABLE INCOME (Blons of dotan) From the preceding data, you know that the level of savings in the economy last year wass billion and the marginal propensity to save in this economy is Suppose that this year, disposable income is projected to be $700 billion. Based on yoor analysis, you would expect consumption to bes billion and savings to be S billion. CONSUMPTION (Blions of dolars)

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter9: Aggregate Demand

Section: Chapter Questions

Problem 1.1P

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