Question

In: Economics

1. Suppose that the MPC is equal to 0.8 and autonomous consumption spending is 400. Then...

1.

Suppose that the MPC is equal to 0.8 and autonomous consumption spending is 400. Then the consumption function is given by

a.

C = 400 - 0.8Yd
b.

C = -400 + 0.2Yd
c.

C = 320 x Yd
d.

C = 400 + 0.8Yd
e.

C = 400 + 0.2Yd

2.

Suppose that the MPC is equal to 0.8 and autonomous consumption spending is 400. At what level of income is saving = 0?

a.

400
b.

500
c.

2000
d.

320
e.

1200

3.

The saving function

a.

. is an upward-sloping straight line with a vertical intercept of -C0 and a slope of (1 - b).
b.

shows that in some ranges of income saving may be negative.
c.

is given by the equation S = -C0 + (1 - b)Yd
d.

can be derived from the consumption function.
e.

all of the above

Solutions

Expert Solution

Rahul Sunny answered 8 months ago
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