In macroeconomics, the marginal propensity to consume (MPC) is the proportion of extra income that is spent on consumption, and it is important for determining the effects of monetary and fiscal policy. In this exercise, you will estimate the MPC with the slope from regression analysis. 1. Your two variables are consumption and income. Which is the dependent variable and which is the independent variable? 2. You have the following data on consumption and income (in $10,000s). Income Consumption 7 9 11 5 8 2 9 12 7 2 7 2 8 9 Make a scatterplot and draw the line of best fit.
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- QUESTION 1An individual lives for two periods and decides how much to consume in each period.- In the first period his consumption equals C1 and his income Y1 = 200- In the second period his consumption equals C2 and his income Y2 = 100He can save or borrow money in the first period to finance his consumption in the second period.The interest rate he gets in case he saves or has to pay in case he borrows money equals 7%.Determine the budget constraint of this individual. C2 = −0.935·C1 +314C2 =−1.07·C1 +314C2 =−0.8·C1 +314C2 =−1.08·C1 +314 QUESTION 2The total production of a good y is determined by the production function y = 3L2/3K1/3, where L is labour input and K capital input.The reward (factor prices) for labour and capital are, l = 27 en r = 2, respectively.The producer needs to produce 9000 units of good y.How much units of labour will he hire if he wants to miminize his total costs? 1587,4839,953000515,23 QUESTION 3A good is traded on a perfectly competitive…hich theory of consumption best explains the consumption behavior of consumers of our economy? Question No: 02 [Marks: 10] If the State Bank started printing large quantities of Pakistani Rupees (Rs), what would happen to the number of Pakistani Rupees a dollar could buy? Why? Question No: 03 [Marks: 10] Deseribe the difference batuuean foreian diract investmet and foraion nortfolie invastment Who is mora likelu toQuestion: How can there be "Autonomous Spending" even when a person has zero income? O a) All of the above are correct. b) People need to consume at least a minimum to stay alive. UO People need a certain level of consumption even if they do not have income. O d) People spend money from their savings, borrowing or from unemployment or pension pay.
- if we are studying the relationship .4 between consumption (C) and disposable income (Yd), wealth (W) then we reach the following results Ci=20+ 0.75*Ydi + 0.01*Wi if Ydi=1000, wealth =10000 and disposable income Yd increase by 100 then consumption will change * ???????????????byOne of these four answers best explains the effect of disposable income on consumption. Which one? O Disposable income does not determine consumption. O Disposable income is the most powerful determinant of income and determines how much an individual consumes. O When an individual has more disposable income, he or she is likely to consume less. O Disposable income is an important determinant of expected future income.Explain how does adecrease in the current income y affect the consumer’s consumption-saving decision. In particular,explain: 1) How will current consumption c, future consumption c′, and savings s change; 2) Arethere any substitution effect or income effect. Make sure you draw two figures, one for the borrowersand one for the lenders
- please explain this dynamic multiplier graph that givenAssume that a nation's marginal propensity to consume (MPC) is 0.75. A highiy productive, cost-cutting technology is developed for the production of commercial airplanes. The total industry expenditure in this nation is $100 million for the immediate acquisition and adoption of this technology. (a) For this nation, identify and explain how much this spending on new technology will change each of the following in the first round: i. Income (GDP) L. Saving i. Consumption (b) Assuming a closed economy and no leakages, identify and explain how much this spending on new technology will change each of the following at the end of the final round: i. Income (GDP) ii. Saving li. ConsumptionConsider the model in chapter 3. Suppose the consumption equation is represented by the following function: C=250 +0.5YD. I-50, G-T-100. Given the above information,, we know that equilibrium consumption is O O O 600 450 800 550 650
- You are an economic advisor to the government. Discuss your opinion . a) How COVID-19 pandemic will affect the consumption behavior as well as the investment done by the firms and household for the next two years? b) What are the actions or policies that the government can implement to face this situation? please answers with analysis and --graph (if possible)Assume in a simple economy that the level of saving is –500 whenaggregate output equals zero and that the marginal propensity tosave is 0.2. Derive the saving function and the consumption func-tion, and draw a graph showing these functions. At what level ofaggregate output does the consumption curve cross the 45° line?Explain your answer and show this on the graph.ON 102 LEC 850 - Winter 2023 - INTRODUCTION TO MACROEC ard / My courses / ECON 102 (LEC 850 Winter 2023) General / S on 12 ed out of on ve Progress Which of the following changes in personal income tax would lead to the smallest increase in consumption? O a. a $30 000 decrease in taxes, if MPC equals 0.25 O b. a $15 000 decrease in taxes, if MPC equals 0.6 O c. a $20 000 decrease in taxes, if MPC equals 0.5 O d. a $12 000 decrease in taxes, if MPC equals 0.75 O e. e. a $10 000 decrease in taxes, if MPC equals 0.2 Previous page Time left 4:58:21 Last saved at 22:40:19 cross out cross out cross out cross out cros ut Finish attempt ... Quiz nav 1 7 2 8 Finish att