Suppose the marginal propensity to consume equals 0.7 (i.e., c1 = 0.7). Given this information, which of the following events will cause the largest increase in output? Select one: A. G increases by 250 B. T decreases by 250 C. I increases by 200 D. G increases by 250 and T increases by 250
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Q: As shown in Exhibit 8-2, the marginal propensity to consume (MPC) is:
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Q: What is the Marginal Propensity to Consume (MPC) when income and consumption increase to 450 and 315…
A: MPC = 0.5
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A: 500*0.5=250
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- Equation for consumption is C=40/(0.8Y) where Y= yearly income = $400. The marginal propensity to consume is _______?Let C 40+ 0.8y and I = 10. The value of the marginal propensity to consume is OA. 40. OB. 0.4. OC. 0.8. OD. 8.The marginal propensity to consume is a)the average amount of income that is consumed or spent b)the ratio of consumption to income c)the ratio of the change in consumption to a change in income d)the ratio of income to consumption
- If C = 12 + 4/5Y, I = 20, what is the values the marginal propensity to save? What is equilibrium level of Y? Show that in equilibrium S = I.Assume the marginal propensity to consume is 0.5 (c1 =0.5). Given this data, which of the following events will result in the greatest increase in output? I decreases by 300. O I decreases by 250. G increases by 300. Tincreases by 250. G decreases by 300.Equation for consumption is C=40/(0.8Y) where Y= yearly income = $400. A) what is the level of consumption B) what is the average propensity to consume
- Assume that Consumption is C = c(Y-T); Taxes T = tY; Investment / = -bi; and Government expenditure (G) is exogenous. Determine the multiplier for an increase in the tax rate.You are given the following data concerning Freedonia, a new republic. 1) Consumption is 200 when income is zero and the marginal propensity to consume is 0.6 out of every dollar increase in income 2) Investment function: I = 200 3) AE ≡ C + I 4) AE = Y Questions A. Derive the savings function? B. Graph equations 3) and 4) and solve for equilibrium income (Y). C. Suppose equation 2) is changed to I = 150. What is the new equilibrium level of income (Y)? By how much does the $50 decrease in planned investment change equilibrium income? What is the value of the tax multiplier?The marginal propensity to consume is typically a. between -1.0 and 1.0 b. between zero and 1.0 c. equal to 1.0 d. less than zero or greater than 1.0 e. equal to zero
- The graph represents consumption (C) as a function of disposable income (DI). Assume the consumption function is linear. What is the value of the marginal propensity to consume (MPC)? Round the value of the MPC to two decimal places. MPC = Consumption $1050 900 750 600 450 300 150 0 $150 300 450 600 C = DI C 750 900 1050 Disposable incomeYou are given the following data concerning Freedonia, a new republic. 1) Consumption is 200 when income is zero and the marginal propensity to consume is 0.6 out of every dollar increase in income 2) Investment function: I = 200 3) AE ≡ C + I 4) AE = Y Derive the savings function? Graph equations 3) and 4) and solve for equilibrium income (Y). Suppose equation 2) is changed to I = 150. What is the new equilibrium level of income (Y)? By how much does the $50 decrease in planned investment change equilibrium income? What is the value of the tax multiplier?If the marginal prospensity to consume is 0.75, an increase in autonomous investment of 800.00 will result in a a) 3200 increase in the level of autonomous consumption b) 3200 increase in the equilibrium level of income c) 1500 increase in the equilibrium level of income d) 1300 increase in the level of induced consumption