Consider a hypothetical economy in which the marginal propensity to consume (MPC) is 0.50. That is, if disposable income increases by $1, consumption increases by 50¢. Suppose further that last year disposable income in the economy was $400 billion and consumption was $350 billion.
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- Suppose now that country's national income increases to $35 billion. Assuming the amount paid in taxes is fixed at $12 billion and MPC = 0.7, what will be the new household consumption? $22.3 billion $21.6 billion $23.7 billion $19.5 billion2. The consumption function Consider a country with the national income of $12 billion, the amount of taxes paid by households of $3 billion, and household consumption of $7 billion. Suppose that the marginal propensity to consume (MPC) is 0.75. On the following graph, use the blue line (circle symbol) to plot the economy's consumption function. Hint: You should plot the first point where household consumption equals $7 billion. Then, plot the second point when real disposable income rises by $4 billion. REAL CONSUMPTION (Billions of dollars) 20 18 16 + 14 12 10 0 0 2 4 6 8 10 12 14 16 18 20 REAL DISPOSABLE INCOME (Billions of dollars) -0 O $7.75 billion O $9.75 billion O $7.5 billion O $10.75 billion Consumption Function (?) Suppose now that country's national income increases to $13 billion. Assuming the amount paid in taxes is fixed at $3 billion and MPC= 0.75, what will be the new household consumption?Economics 1. Graphing the consumption function from the MPC Consider a hypothetical economy in which the marginal propensity to consume (MPC) is 0.75. That is, if disposable income increases by $1, consumption increases by 75c. Suppose further that last year disposable income in the economy was $500 billion and consumption was $400 billion. On the following graph, use the blue line (aircle symbol) to plot this economy's consumption function based on these data. (?) 700 600 300 -100 400 500 600 700 100 200 300 DISPOSABLE INCOME (Blions of dotans) From the preceding data, you know that the level of savings in the economy last vear was s billion and the marginal propensity to save in this economy is Suppose that this year, disposable income is projected to be $700 billion. Based on your analysis, you would expect consumption to be S billion and savings to be S billion, CONSUMPTION (Bilions of dolars)
- Economics 1. Graphing the consumption function from the MPC Consider a hypothetical economy in which the marginal propensity to consume (MPC) is 0.75. That is, if disposable income increases by $1, consumption increases by 75c. Suppose further that last year disposable income in the economy was $500 billion and consumption was $400 billion. On the following graph, use the blue line (aircle symbol) to plot this economy's consumption function based on these data. 700 600 300 -100 300 400 500 600 700 100 200 DISPOSABLE INCOME (Blions of dotani) From the preceding data, you know that the level of savings in the economy last vear was s billion and the marginal propensity to save in this economy is Suppose that this year, disposable income is projected to be $700 billion. Based on your analysis, you would expect consumption to be S billion and savings to be s billion, CONSUMPTION (Blions of dolars)5. Graphing the saving and consumption functions from MPC Consider a hypothetical economy in which the marginal propensity to consume (MPC) is 0.5. That is, if disposable income increases by $1, consumption increases by 50¢. Suppose further that last year, disposable income in the economy was $300 billion and consumption was $250 billion. Based on these data, use the blue line (circle symbols) to plot this economy's consumption function on the following graph. REAL CONSUMER SPENDING (Billions of dollars) 700 600 500 400 300 200 100 0 Aa Aa -100 Consumption Fn. O O 0 100 200 300 400 500 600 700 800 REAL DISPOSABLE INCOME (Billions of dollars) Help Clear All Suppose that this year, disposable income is projected to be $340 billion. Based on your analysis, you would expect consumption to be and saving to be7. The consumption function Consider a country with the national income of $11 billion, the amount of taxes paid by households of $3 bilion, and household consumption of $7 billion. Suppose that the marginal propensity to consume (MPC) is 0.75. On the following graph, use the blue line (circle symbol) to plot the economy's consumption function. Note: Select and drag the line segment from the palette to the graph. Then select a point on the line segment and drag it to its desired position. CONSUMPTION (Bons of dollars) u) 18 10 12 10 4 6 16. 12 14 14 DISPOSABLE INCOME (ons of dollars) 18 M Consumption Function
- 2. Suppose that consumption equals $500 billion when the disposable income is $0 and that each increase of $100 billion in disposable income causes consumption to increase by $70 billion. a. Draw a graph of the consumption function using this information. The axes must be labeled correctly, and the consumption function should have at least two points on the graph (correct coordinates). b. What is the Marginal Propensity to Consume in this economy? How did you arrive at your answer? Please show your work. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.Calculate the Marginal Propensity to Consume and the Marginal Propensity to Save. Fill in the blanks in the following table. Show that the MPC plus the MPS equals 1. National Income & Real GDP (Y) Consumption (C) Saving (S) MPC MPS $9,000 $8,000 $10,000 $8,600 $11,000 $9,200 $12,000 $9,800 $13,000 $10,400What are the four categories of aggregate expenditure (demand)? Give an example of each. 9.1 Calculate the Marginal Propensity to Consume and the Marginal Propensity to Save. Fill in the blanks in the following table. Show that the MPC plus the MPS equals 1. National Income & Real GDP (Y) Consumption (C) Saving (S) MPC MPS $9,000 $8,000 $10,000 $8,600 $11,000 $9,200 $12,000 $9,800 $13,000 $10,400
- 1. Graphing the consumption function from the MPC Consider a hypothetical economy in which the marginal propensity to consume (MPC) is 0.80. That is, if disposable income increases by $1, consumption increases by 80¢. Suppose further that last year disposable income in the economy was $400 billion and consumption was $350 billion. On the following graph, use the blue line (circle symbol) to plot this economy's consumption function based on these data. CONSUMPTION (Billions of dollars) 700 600 500 400 300 200 100 0 -100 0 200 400 500 600 DISPOSABLE INCOME (Billions of dollars) 100 300 700 800 From the preceding data, you know that the level of savings in the economy last year was $ economy is billion and the marginal propensity to save in this1. Graphing the consumption function from the MPC Consider a hypothetical economy in which the marginal propensity to consume (MPC) is 0.80. That is, if disposable income increases by $1, consumption increases by 80¢. Suppose further that last year disposable income in the economy was $500 billion and consumption was $450 billion. On the following graph, use the blue line (circle symbol) to plot this economy's consumption function based on these data. CONSUMPTION (Billions of dollars) 700 600 500 400 300 200 100 0 -100 0 200 300 400 500 600 700 DISPOSABLE INCOME (Billions of dollars) 100 800 O ? From the preceding data, you know that the level of savings in the economy last year was economy is billion and the marginal propensity to save in this Suppose that this year, disposable income is projected to be $700 billion. Based on your analysis, you would expect consumption to be $ billion and savings to be $ billion.3. The consumption function Suppose that national income in a country is $30 billion, taxes paid by households is $10 billion, household consumption is $18 billion, and the marginal propensity to consume (MPC) is 0.8. On the following graph, use the blue line (circle symbol) to plot the economy's consumption function. CONSUMPTION (Billions of dollars) 50 45 40 35 30 25 20 15 10 5 0 0 5 + + + 10 15 20 25 30 35 40 DISPOSABLE INCOME (Billions of dollars) O $25.2 billion $26.8 billion $24.4 billion 45 0.8, Suppose now that country's national income increases to $34 billion. Assuming the amount paid in taxes is fixed at $10 billion and that MPC = what will be the new household consumption? $21.2 billion 50 Consumption Function (?)