Question

The slope of the consumption function is equal to

the marginal propensity to save.

the real interest rate.

the marginal propensity to consume.

the nominal interest rate.

the relative price of consumption.

Answer #1

Correct choice is **the marginal propensity to
consume.**

Marginal propensity to consume addresses a key economic issue: how much does the consumer spends out of her increased income which implies the proportion of additional income spent. It is the slopeof the consumption function.

Explain and give examples of the consumption function,
autonomous consumption, and Marginal Propensity to Consume.

Which of the following events will cause the slope of the
consumption function to be steeper?
1. A decrease in the marginal propensity to save
2. An increase in disposable income
3. An unforeseen increase in inventories
4. An increase in real GDP
5. Exercise on the consumption and saving function

How are marginal propensity to Consume and marginal Propensity
to Save calculated?

4. Keynesian Economics
a.What is the Keynesian consumption function?
b.What is the marginal propensity to consume?
c.Reread the textbook material on the simple Keynesian model
(pp.258–263, pp 226-230 in the eleventh edition).
i.
What is the multiplier?
ii. Suppose the marginal propensity to consume is 0.75.Compute the
multiplier
iii. Given the value you computed for the multiplier, compute the
amount by which real GDP
increases, when the government
increases purchases by $100 billion.
(Note:The value of the mpc...

Define “marginal propensity to consume” (MPC) and “marginal
propensity to save” (MPS) in plain English. What must be true about
the sum MPC+MPS?

a) Suppose the marginal propensity to consume is 0.7, what will
happen to real GDP if planned investment increases by $300
billion?b) Suppose the marginal propensity to save is .4, what how
much will taxes have to change if real GDP decreases by $450
billion?

QUESTION 26 Which of the following is not true about the
marginal propensity to consume? It is equal to the change in
consumption divided by the change in disposable income. It is equal
to the slope of the consumption function. It is equal to 1 - MPS.
It is always equal to or greater than 1. A. It is equal to the
change in consumption divided by the change in disposable income.
B. It is equal to the slope of...

Assume the following values: Marginal Propensity to
Consume b = 0.8; Autonomous Consumption a = 200; Investment
Spending I = 250. There is no government spending.
a) For a consumption function C = a + bY, what is the
equilibrium value for income Y in the economy? (The value at which
planned aggregate expenditure and planned output coincide.)
b) What changes when Investment Spending increases to 300? When
it drops to 225?
c) What effect can you observe in the...

To represent the consumption function through algebra, it would
be expressed as___. A)C=a + MPC*Y, where a is autonimous
consumption(the amount of consumption expenditure when Y=0), MPC is
the marginal propensity to consume, and Y is national income. B)MPC
+ MPS = 1, where a MPC is the marginal propensity to consume and
MOS is the marginal propensity to save. C) C= a+ MPS*Y,where a is a
autonimous consumption( the amount of consumption expenditure when
Y= 0), MPS is the...

Suppose that the marginal propensity to save is
dS/dy=0.2-0.1e^-2y and the consumption is 7.8 trillion when
disposable income is $0. Find the national consumption function:
C(y)=?
Note:In my textbook, the answer is C(y)=0.8y-0.05e^-2y+7.85. I
like to know why/how?

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