Use the following table with information on the consumption behavior of the people of otham to answer the following questions: Disposable Income Consumption $300 $440 $0 $200 What is the value of 'a' or autonomous consumption in this economy? . What is the value of 'b’ or the Marginal Propensity to Consume (MPC) in this economy? nterpret the meaning of this MPC value in one sentence.
Use the following table with information on the consumption behavior of the people of otham to answer the following questions: Disposable Income Consumption $300 $440 $0 $200 What is the value of 'a' or autonomous consumption in this economy? . What is the value of 'b’ or the Marginal Propensity to Consume (MPC) in this economy? nterpret the meaning of this MPC value in one sentence.
Chapter9: Demand-side Equilibrium: Unemployment Or Inflation?
Section: Chapter Questions
Problem 2DQ
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![1. Use the following table with information on the consumption behavior of the people of
Gotham to answer the following questions:
Disposable Income Consumption
$300
$440
$0
$200
a. What is the value of 'a' or autonomous consumption in this economy?
b. What is the value of 'b’ or the Marginal Propensity to Consume (MPC) in this economy?
Interpret the meaning of this MPC value in one sentence.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb81a1ef6-0347-4062-b7ea-9e507390b385%2F908c57f2-e41f-4797-a9c3-7f4893d162ff%2Ftd77q9_processed.png&w=3840&q=75)
Transcribed Image Text:1. Use the following table with information on the consumption behavior of the people of
Gotham to answer the following questions:
Disposable Income Consumption
$300
$440
$0
$200
a. What is the value of 'a' or autonomous consumption in this economy?
b. What is the value of 'b’ or the Marginal Propensity to Consume (MPC) in this economy?
Interpret the meaning of this MPC value in one sentence.
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
Step 1
The autonomous consumption does not depend on the level of income. The autonomous consumption does not fall to zero when income of consumer is zero.
The Marginal propensity to consumer = Change in consumption /change in income
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