Question

Assume that autonomous consumption is ​$1,620 billion and disposable income is ​$12,700 billion. Using the consumption​ function, calculate consumption expenditure if an increase of​ $1,000 in disposable income leads to an increase of ​$720 in consumption expenditure.

Consumption expenditure is

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Answer 1

Autonomous consumption is that expenditure on consumption which takes place when disposable income is zero.

Consumption expenditure here is $10,764.

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