Macroeconomics
21st Edition
ISBN: 9781259915673
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
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Question
Chapter 10.2, Problem 4QQ
To determine
Consumption and disposable income.
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The multiplier is the ratio of the change in ________ to a change in ________.
Select one:
a. the level of saving; the level of consumption
b. autonomous consumption; induced consumption
c.Ā theĀ Ā MPC; theĀ Ā MPS
d.Ā the equilibrium level of output; some autonomous variable
If Evan's income is reduced to zero after he loses his job, his consumption will be ________ and his saving will be ________.
a.greater than zero; less than zero
b.greater than zero; greater than zero
c.less than zero; greater than zero
d.less than zero; less than zero
The following table shows data for the economy before the decrease in saving. Suppose that the decrease in saving causes consumption to rise from $280 million to $320 million. Assume Say's law holds in this economy.
Fill in the data for the economy after the decrease in saving.
Ā
Before Saving Decrease
After Saving Decrease
Consumption (C)
$280 million
$320 million
Investment (I)
$200 million
$
Ā
Ā million
Government Purchases (G)
$250 million
$
Ā
Ā million
Exports (EX)
$500 million
$500 million
Imports (IM)
$300 million
$300 million
Ā
As a result of the decrease in saving, total expenditures willĀ Ā Ā .
Chapter 10 Solutions
Macroeconomics
Ch. 10.2 - Prob. 1QQCh. 10.2 - Prob. 2QQCh. 10.2 - Prob. 3QQCh. 10.2 - Prob. 4QQCh. 10.5 - Prob. 1QQCh. 10.5 - Prob. 2QQCh. 10.5 - Prob. 3QQCh. 10.5 - Prob. 4QQCh. 10 - Prob. 1DQCh. 10 - Prob. 2DQ
Ch. 10 - Prob. 3DQCh. 10 - Prob. 4DQCh. 10 - Prob. 5DQCh. 10 - Prob. 6DQCh. 10 - Prob. 7DQCh. 10 - Prob. 8DQCh. 10 - Prob. 9DQCh. 10 - Prob. 1RQCh. 10 - Prob. 2RQCh. 10 - Prob. 3RQCh. 10 - Prob. 4RQCh. 10 - Prob. 5RQCh. 10 - Prob. 6RQCh. 10 - Prob. 7RQCh. 10 - Prob. 8RQCh. 10 - Prob. 9RQCh. 10 - Prob. 1PCh. 10 - Prob. 2PCh. 10 - Prob. 3PCh. 10 - Prob. 4PCh. 10 - Prob. 5PCh. 10 - Prob. 6PCh. 10 - Prob. 7PCh. 10 - Prob. 8PCh. 10 - Prob. 9PCh. 10 - Prob. 10P
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Similar questions
- 1. The marginal propensity to consume is:A) the change in consumption divided by the change in income.B) consumption divided by income.C) the change in consumption divided by the change in saving.D) The change in saving divided by the change in income.arrow_forwardSaving = a. disposable income minus taxes b. income minus taxes c. 1 ā MPC d. disposable income minus consumptionarrow_forwardThe government raises taxes by $100 billion. If the marginal propensity to consume is 0.8 What happens to the following? Do they rise or fall? By what amounts?a. Public saving. b. Private saving. c. National savingarrow_forward
- Give typing answer with explanation and conclusionĀ Which of the following statements concerning consumption is incorrect? Ā A.Ā WEALTHY PEOPLE CONSUME MORE THAN OTHER PEOPLE. Ā B.Ā EXPECTATIONS ABOUT FUTURE PRICES AFFECT CONSUMPTION. Ā C.Ā MARGINAL PROPENSITY TO CONSUME USUALLY DECREASES AS INCOMES RISE. Ā D.Ā SAVINGS RATES DECREASE AS INCOME INCREASES. Ā E.Ā TAX INCREASES REDUCE CONSUMPTION.arrow_forwardThe sum of the marginal propensity to save and the marginal propensity to consume Select one: A. always equals 0. B. is greater than zero but less than 1. C. sometimes equals 1. D. always equals 1. E. never equals 1.arrow_forwardpersonal consumption expenditures (C) and disposable income (Y d):Ā Year C YĀ d1 300 400Ā 2 500 700Ā a. Compute the marginal propensity to consume.Ā b. Compute the amount of savings for years 1 and 2.Ā c. Compute the marginal propensity to save.arrow_forward
- Disposable income is the amount a household hasĀ A Ā after subtracting autonomous spending. B Ā after subtracting taxes and transfer payments to income. C Ā sometimes called discretionary spending. D Ā available for consumption spending and saving.arrow_forwardAutonomous consumption is: Ā Ā A. the level of consumption when disposable income is more that $40,000 a year Ā B. the level of consumption when disposable income is 0 Ā C. the level of consumption when all disposable income is saved Ā D. the level of consumption when disposable income variesarrow_forwardAn increase in expected future income________. Select one: A.Ā decreases consumption expenditure B.Ā increases saving C.Ā shifts the consumption function upward D.Ā shifts the saving function upwardarrow_forward
- 1. Given the following table. Income (RM million) Consumption (RM million 0. 100 100 150 200 200 300 250 400 300 500 350 a. How much is the autonomous consumption in the economy? b. How much investment should be increased to achieve an income of RM400 million? c. Calculate the MPS. d. Derive the consumption function.arrow_forwardwhich of the following occurs when disposable income is zero? Select one: a.Ā consumption is negative b.Ā consumption must be zero c.Ā none of the given options d.Ā saving must be zeroarrow_forwardThe Average Propensity to Consume is: Ā Ā A. the percentage of disposable income that is consumed Ā B. the percentage of disposable income that is saved Ā C. the percentage of disposable income that is spent Ā D. the percentage of disposable income that is investedarrow_forward
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