The consumption function macroeconomics is often written as C= a + b(Y-T) where b expresses: a. The marginal savings rate b. The marginal propensity to consume c. The interest rate that maximizes consumption d. The relationship between tax and consumption
Q: The marginal propensity to consume is 0.75. What will be the initial change in consumption when?…
A: The marginal propensity to consume refers to a proportionate change in consumption due to the change…
Q: Q.1.7 If the marginal propensity to consume increases: (2) (1) The slope of the consumption function…
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A: Increase in expected future income have certain effect on current consumption.
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Q: value of MP S is 0.25 what is the value of marginal propensity to consume.
A: Formula: Marginal propensity to consume = 1-Marginal propensity to save
Q: Which of the following statements is true?
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A: Hi, thank you for the question. As per our Honor code, we are allowed to attempt only first three…
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A: Given MPC = 0.8 Multiplier = 1/MPS
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A:
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Q: Consider an economy described by the following equations Y = C +I + G C = 100 + 0.75(Y – T) I = 500…
A: Hi Student, thanks for posting the question. As per the guideline we are providing answers for the…
Q: Q.1.8 If the marginal propensity to consume increases: (1) The slope of the consumption function…
A: Marginal propensity to consume is the change in consumption that occurs due to the change in income.…
Q: Which of the following statements about consumption is correct? (1) The level of autonomous…
A: Consumption function shows the relationship between income and consumption.
Q: Explain what the consumption function shows, and describe what is held constant along the…
A: Since you have asked multiple questions, we will solve the first question for you. If you want any…
The consumption function
a. The marginal savings rate
b. The marginal propensity to consume
c. The interest rate that maximizes consumption
d. The relationship between tax and consumption
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- Why will a temporary tax increase be insignificant in reducing consumption expenditures by the amount expected a) Because people viewed the tax increase as permanent. b) Because people chose to increase their saving. c) Because people viewed the tax increase as temporary. d) consumption expenditures are not related to the level of taxation.The figure represents the consumption function for a consumer. The distance between C and D represents A. the amount of saving. B. the amount of autonomous consumption. C. the amount of dissaving. D. the point where saving equals zero.Explain what happens to consumption, investment, and the interest rate when the government increases taxes. Show graphically the effect of increased taxes when saving is not dependent on interest rate.
- Which of the following statements is correct? The saving function and the consumption function have the same slope. The consumption function is the same in the short and in the long run. Disposable income does not affect the level of savings. The steeper the consumption function, the flatter the saving function.a. Suppose the government increases both taxes (7) and government purchases (G) by equal amounts. Assuming income (Y) is fixed by the factors of production, the change in national saving (AS) will be (MPC-1) * AT. (1-MPC) x AT. b. The larger is the MPC (the closer it is to 1), the will be the increase in the interest rate. will be the decline in investment, and theWhat can we predict about the effect on consumption of an increase in government spending? A) Consumption will increase by an amount equal to the MPC times the change in real GDP. B) Consumption will increase by an amount equal to the MPC times the change in government spending. C) Consumption will increase by the amount of the government spending. D) Consumption will not rise as government spending rise
- The marginal propensity to consume is a)the average amount of income that is consumed or spent b)the ratio of consumption to income c)the ratio of the change in consumption to a change in income d)the ratio of income to consumptionThe marginal propensity to consume is typically a. between -1.0 and 1.0 b. between zero and 1.0 c. equal to 1.0 d. less than zero or greater than 1.0 e. equal to zero7. If the consumption function is C=80 + 0.6Y, the marginal propensity to save equals:(A) 0.6. (B) 0.4. (C) 0.5. (D) -0.4.
- Explain what the consumption function shows and describe what is held constant along the consumption function . Response Must be 200 words in lengthThe marginal propensity to consume is Select one: a. never bigger than 1 b. equal to disposable income divided by consumption c. always equal to the marginal propensity to save d. normally assumed to increase as disposable income increases e. all of the aboveWhich of the following statements are correct? The introduction of government spending increases the size of the multiplier. The introduction of taxes increases the size of the multiplier. The introduction of taxes reduces the slope of the consumption function. Select one: A. A B. None of the statements is correct. C. C D. B