3. Due to political turbulences in Hong-Kong and the extensive protests consumers’ confidence has deteriorated in...

3. Due to political turbulences in Hong-Kong and the extensive protests consumers’ confidence
has deteriorated in the island. The marginal propensity to consume has declined from 0.8 to 0.6.

a. Use the consumption model to asses the effects of the decline in MPC on overall
consumption. Use the model and the graphs. Explain.

b. How it will affect overall aggregate demand? Use the AD model with positive slope (model, graph, and explanation).
(model, graph and explanation)

Solutions

Expert Solution

Use the Keynsian Criss and Consumption formula. Just a bit of basics and doesn't require high level economics.

Pardon me if it's not clear. I tried my best. You can comment below your problem and I'll try to resolve it.

Rahul Sunny answered 1 year ago

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