Question

Suppose you discover that you have a rich uncle that will give you millions in the...

Suppose you discover that you have a rich uncle that will give you millions in the near future. Draw the appropriate shift in autonomous spending on the graph.

Homework Answers

Answer #1


Consumption spending = CS

Disposable income is the income after tax.

45 degree line indicates the equilibrium line.

Autonomous spending is the amount of such spending when there is no income; it fulfils basis necessities.

The spending is AE, where the autonomous consumption is “a”, before the discovery.

Once there is a discovery of getting huge amount of money very recently, today’s spending should increase and shift the AE curve to the left as AE1.

The autonomous spending should also be increased to “b”.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
You have just received $175,000 from the estate of a long-lost rich uncle. If you invest...
You have just received $175,000 from the estate of a long-lost rich uncle. If you invest all your inheritance in a tax-free bond fund earning 6.6% compounded quarterly, how long do you have to wait to become a millionaire? (Round your answer to two decimal places.)
6. Suppose 15 year old Willy has saved $5,000. Willy’s uncle offers to pay him $5,000...
6. Suppose 15 year old Willy has saved $5,000. Willy’s uncle offers to pay him $5,000 if he spends nothing on any legal ‘vice’ activity (gambling, alcohol or tobacco consumption) prior to Willy’s 21st birthday. Without this monetary incentive, Willy would choose to spend $6000 on ‘vice’ activities. a) Graphically depict a situation in which his uncle’s “reward” (or bribe) to Willy for spending nothing on ‘vice’ activities could have been as little as $3,000, and yet it would still...
1.Suppose you discover a fossil that is an impression of an ancient organism. You observe that...
1.Suppose you discover a fossil that is an impression of an ancient organism. You observe that the organism did not have any hard cell walls, but did seem to have muscular tissue. Explain how each of these traits supports or does not support the classification of the organism as an animal. List at least three characteristics of organisms in the Domain Eukarya 1. 2. 3.
Suppose that during an electrophysiology experiment you discover that the dopamine axons that project to the...
Suppose that during an electrophysiology experiment you discover that the dopamine axons that project to the nucleus accumbens AND striatum are expressing a mutated form of a voltage gated potassium channel that is much slower to close than normal. What effect on addiction related motivated behaviours would this mutation have? Explain your answer clearly.
Suppose U(x)=x0.5 a. Graph this utility function. b. Suppose you have a binary lottery with a...
Suppose U(x)=x0.5 a. Graph this utility function. b. Suppose you have a binary lottery with a 40% chance of $25 and a 60% chance of $100. Draw the probability tree of this lottery. c. Show the lottery in Part B on your graph from Part A. You need to show: U(25), U(100), EV, U(EV), EU, U(CE) and the CE. Be sure to label everything clearly. d. What can you say about the CE and EV for this lottery? Why?
Suppose that you have the following information for an economy: Marginal propensity to consume - MPC...
Suppose that you have the following information for an economy: Marginal propensity to consume - MPC 0.80 Autonomous consumption - A $500 Planned investment - PI $600 Net exports - NX -$400 Government spending - G $300 You will need this information for the questions that follow. Part 1: When real GDP is equal to $4,500, aggregate expenditure is equal to   $  . Part 2: When real GDP is equal to $5,000, aggregate expenditure is equal to   $  . Part 3: When real GDP...
Suppose U(X)=15+X. a. Graph this utility function b. Suppose you have a binary lottery with a...
Suppose U(X)=15+X. a. Graph this utility function b. Suppose you have a binary lottery with a 40% chance of $0 and a 60% chance of $100. Draw the probability tree of this lottery. c. Show the lottery in Part B on your graph from Part A. You need to show: U(0), U(100), EV, U(EV), EU, U(CE) and the CE. Be sure to label everything clearly. d. What can you say about the CE and EV for this lottery? Why?
29. Suppose you have the following balance of payment account balances for a country (in millions...
29. Suppose you have the following balance of payment account balances for a country (in millions of dollars) Year               1             2           3             4             5    CA               85           95        115           125       150    FA             -100       -105      -110          -115     -125 For each year calculate the country’s official reserve (OR) account balance and very briefly (in one sentence) describe the expected behavior of the real value of its currency over the five-year period.
Suppose that a city operates two neighborhood schools, one in the rich neighborhood and one in...
Suppose that a city operates two neighborhood schools, one in the rich neighborhood and one in the poor neighborhood. The schools are equal in size and currently have equal budgets. The city receives $10 million in federal grant money that can be used to supplement the budgets of the two schools, which are initially identical. For each school, the average score on a standardized achievement test depends on how many dollars are allocated to the school. Letting S denote the...
Suppose that a city operates two neighborhood schools, one in the rich neighborhood and one in...
Suppose that a city operates two neighborhood schools, one in the rich neighborhood and one in the poor neighborhood. The schools are equal in size and currently have equal budgets. The city receives $10 million in federal grant money that can be used to supplement the budgets of the two schools, which are initially identical. For each school, the average score on a standardized achievement test depends on how many dollars are allocated to the school. Letting S denote the...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT