Question

Suppose savings in $1,400 when income is $10,000 and the MPC equals 0.8. When income increases to $12,000 savings is?

Answer #1

MPC is given by change in consumption/change in income

Mpc= 0.8 and income increases by $ 2000 then

0.8 = ∆C/2000

∆C= $ 1600. So consumption increases by $1600 when income increases by $2000

MPC = 1-MPS

So MPS = 0.2

When income increases by$ 2000, the savings would increase by

Mps = change in savings/ change in income

0.2 = ∆ S/ 2000

∆S = 2000*0.2=$ 400

So savings change by $400 .

Hence savings increase from $1400 to $1800 when income increases by $2000.

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PLEASE EXPLAIN
If income rises from $10,000 to $15,000 and consumption
increases from $9,000 to $12,000, then MPC is ____
A.) .5
B.) .6
C.) .7
D.) .8

When Julie Ann's disposable income is $10,000, she spends
$10,000 and when her disposable income is $15,000, her spending is
$12,500. Julie Ann's autonomous consumption is ________ and her
___________.
A.
$5,000; MPC = 0.50
B.
$10,000; MPS = 0.50
C.
$0; MPC = 0.50
D.
$0; MPS = 0.50
E.
$5,000; MPC = 1.

If
consumption increases by $12 billion when real disposable income
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must happen to the MPS? How is the MPC related to the consumption
function? How is the MPS related to the saving function?

Esimates of the MPC in the US are often somewhere between 0.6
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increase GDP, according to the simple formula? Enter your answer to
the nearest cent, but do not include the dollar sign in your
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