Suppose that when disposable income decreases by $2,000, consumption spending increases by $1500. Given this information, we know that the marginal propensity to consume (MPC) is: OPTIONS: 1/.25 = 4. $1,000/$750 = 1.33. 75. 25.
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A: Before preceding to the explanation and numerical part for our problem, let's first understand what…
Suppose that when disposable income decreases by $2,000, consumption spending increases by $1500. Given this information, we know that the marginal propensity to consume (MPC) is:
OPTIONS:
1/.25 = 4.
$1,000/$750 = 1.33.
75.
25.
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- The value of marginal propensity to consume(MPC) is 0.61 Calculate the value of multiplierThe following table shows consumption (C), investment spending (I), and government purchases (G), for some hypothetical economy at several levels of income (reported in billions of dollars of real GDP). Assume that in this economy, income is taxed at a rate of 25%, base consumption is $25 billion, and that the marginal propensity to consume (MPC) is 0.333, or 1/3. Further assume that this economy is closed, that is, there is no international trade and so net exports are always equal to zero. Use the given information to fill in disposable income, consumption, and planned expenditures in the following table. Income: Real GDP Disposable (After Tax) Income C Ip G Planned Expenditures (Billions of dollars) (Billions of dollars) (Billions of dollars) (Billions of dollars) (Billions of dollars) (Billions of dollars) 0 0 25 150 50 100 150 50 200 150 50 300 150 50 400 150 50 500 150 50…The following table shows consumption (C), investment spending (I), and government purchases (G), for some hypothetical economy at several levels of income (reported in billions of dollars of real GDP). Assume that in this economy, income is taxed at a rate of 25%, base consumption is $50 billion, and that the marginal propensity to consume (MPC) is 0.667, or 2/3. Further assume that this economy is closed, that is, there is no international trade and so net exports are always equal to zero. Use the given information to fill in disposable income, consumption, and planned expenditures in the following table. Income: Real GDP Disposable (After Tax) Income C Ip G Planned Expenditures (Billions of dollars) (Billions of dollars) (Billions of dollars) (Billions of dollars) (Billions of dollars) (Billions of dollars) 0 0 50 100 50 100 100 50 200 100 50 300 100 50 400 100 50 500 100 50…
- The graph represents consumption (C) as a function of disposable income (DI). Assume the consumption function is linear. What is the value of the marginal propensity to consume (MPC)? Round the value of the MPC to two decimal places. MPC = Consumption $1050 900 750 600 450 300 150 0 $150 300 450 600 C = DI C 750 900 1050 Disposable income© Macmillan Learning The graph represents consumption (C) as a function of disposable income (DI). Assume the consumption function is linear. What is the value of the marginal propensity to consume (MPC)? Round the value of the MPC to two decimal places. Consumption $1050 900 MPC = 750 600 450 300 150 C=DI C 0 $150 300 450 600 750 900 1050 Disposable incomeCalculate the value of income if consumption is $440 and the average propensity to consume Is 0.88
- As the marginal propensity to consume (MPC) increases, As the marginal propensity to save (MPS) increases, the multiplier the multiplier remains the same. remains the same. decreases. decreases. increases. increases. If the marginal propensity to consume is 0.40, what is the multiplier, assuming there are no taxes or imports? Round to the tenths place. Given the multiplier that you calculated, by how much will gross domestic product (GDP) increase when there is a $1,000 increase in government spending? Give your answer to the nearest whole number. %24If the Marginal Propensity to Consume (MPC) is 0.6, then the expenditure multiplier must be: Group of answer choices 2.5 3.0 3.5 2.0
