Question
In: Economics
2. Assume that the level of autonomous consumption in Mudville is $1000. If the marginal propensity...
2. Assume that the level of autonomous consumption in Mudville is $1000. If the marginal propensity to consume is 0.8, what is the consumption function? Saving function? Give an equation for each and show each graphically. At what level of income is saving = 0? Show on your graphs.
Solutions
Rahul Sunny answered 1 year agoRelated Solutions
Assume that autonomous consumption = 100, and the marginal propensity to consume = 80%. At what...
Assume that autonomous consumption = 100, and
the marginal propensity to consume = 80%.
At what level of
disposable income will savings = 0?
6. If actual investment is higher than planned
investment, what is happening to business
inventories?
Inventories
are growing
Inventories
are shrinking
Inventories
are holding steady
It
depends upon where we are in the busienss cycle
Assume the following economy: Autonomous Consumption = £10,000; Marginal Propensity to Consume = 0.8; Business Investment...
Assume the following economy: Autonomous Consumption = £10,000;
Marginal Propensity to Consume = 0.8; Business Investment = £30,000
A. Find the equilibrium size of income Y and the size of the
Multiplier of Business Investment (hint: to find the Multiplier
increase investment by 10,000) (5%) B. Assume now that a government
sector is introduced, while business investment is still £30,000.
Government spending injects £50,000 into the economy. However, in
order to finance its expenditure the government levies an income
tax...
Assume the following economy: Autonomous Consumption = £10,000; Marginal Propensity to Consume = 0.8; Business Investment...
Assume the following economy: Autonomous Consumption = £10,000;
Marginal Propensity to Consume = 0.8; Business Investment = £30,000
A. Find the equilibrium size of income Y and the size of the
Multiplier of Business Investment (hint: to find the Multiplier
increase investment by 10,000) (5%) B. Assume now that a government
sector is introduced, while business investment is still £30,000.
Government spending injects £50,000 into the economy. However, in
order to finance its expenditure the government levies an income
tax...
Consider two economies. In economy A: autonomous consumption equals 700, the marginal propensity to consume equals...
Consider two economies. In economy A: autonomous consumption
equals 700, the marginal propensity to consume equals 0.80, taxes
are fixed at 50, investment is 100, government spending is 100, and
net exports are 40.
In economy B: autonomous consumption equals 1000, the marginal
propensity to consume equals 0.8, taxes are proportional to income
such that consumers pay 25% of their income as taxes, investment is
250, government purchases are 150, and net exports are 400.
(i) What is the planned...
Consider two economies. In economy A: autonomous consumption equals 700, the marginal propensity to consume equals 0.80,...
Consider two economies. In economy
A: autonomous consumption equals 700, the
marginal propensity to consume equals 0.80, taxes are fixed at 50,
investment is 100, government spending is 100, and net exports are
40.
In economy B: autonomous consumption equals
1000, the marginal propensity to consume equals 0.8, taxes are
proportional to income such that consumers pay 25% of their income
as taxes, investment is 250, government purchases are 150, and net
exports are 400.
Question 1: What is the planned...
Consider a hypothetical economy with autonomous consumption spending equal to 100 billion dollars, a marginal propensity to consume of 0.8
Consider a hypothetical economy with autonomous consumption spending equal to 100 billion dollars, a marginal propensity to consume of 0.8, private investment spending of 160 billion dollars, government spending of 140 billion dollars, a balanced budget, and balanced trade (i.e. exports and imports are equal). Write a short essay comparing the effects (1) on the government budget and (2) on the equilibrium level of income in the economy of (i) a 5 billion dollar increase in government spending and...
Assume the following information for an economy: Natural level of output = $190b Autonomous consumption =...
Assume the following information for an economy:
Natural level of output = $190b
Autonomous consumption = 50
Total investment = 16
Government expenditure = 19
Autonomous taxation = 20
Marginal propensity to consume = 0.6
Based on this information answer the following questions:
a) Calculate the actual equilibrium level of output for this
economy.
b) Calculate the output ratio for the economy.
c) Using the Phillips Curve illustrate the current approximate
position for the economy and identify this as point...
What is consumption function? What is the marginal propensity to consume? What does a steep consumption...
What is consumption function? What is the marginal propensity to
consume? What does a steep consumption function mean?
1)Which of the following is true? a)Marginal propensity to consume shows the change in consumption as...
1)Which of the following is true?
a)Marginal propensity to consume shows the change in
consumption as a result of a change in disposable
income.
b)Disposable income is roughly national income minus net
taxes.
c)Disposable income is either saved or
consumed.
d)Both b and c.
e)a, b, and c.
2)Everything else constant, inflation
a)Leads to an increase in a country’s net
exports.
b)Increases firms’ inventories below the desired
level.
c)Causes a movement along the aggregate demand curve,
while shifting the expenditure...
Choose the correct answer. A.1 The marginal propensity for consumption shows us: A. the change in...
Choose the correct answer.
A.1 The marginal propensity for consumption shows us:
A. the change in consumption per unit of change in income.
B. the percentage of income consumed.
C. how income changes when consumption changes.
D. all of the above.
A.2 If in a period there is an unpredictable increase in demand,
then:
A. the investment made will be equal to the desired
investment.
B. the investment made will be greater than the desired
investment.
C. the investment made...
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