The following chart shows two separate consumption functions. Which of the following statements is true if the consumption function shifts from Cl to C27C2C1YdThe marginal propensity to oonsume decreased and autonomous consumption incressedThe marginal propensity to consume increased and autonomeous consumption increasedThe marginal propensity to conaume increased and autonomous consumption decreasedThe marginal propensity to coasume decreased and autonomous conumption decreased

The consumption function reflects the total consumption spending by the household of an economy…

The marginal propensity to consume decreased and autonomous consumption incressed The marginal propenaity to coesume increased and autonomous consumption increased The marginal propensity to consume increased and autonomous consumption decreased The marginal propensity to coasume decreased and autonomous conumption decreased

The marginal propensity to consume decreased and autonomous consumption incressed The marginal propenaity to coesume increased and autonomous consumption increased The marginal propensity to consume increased and autonomous consumption decreased The marginal propensity to coasume decreased and autonomous conumption decreased

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter9: Demand-side Equilibrium: Unemployment Or Inflation?

Section: Chapter Questions

Problem 7TY

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Assume in a simple economy that the level of saving is –500 whenaggregate output equals zero and that the marginal propensity tosave is 0.2. Derive the saving function and the consumption func-tion, and draw a graph showing these functions. At what level ofaggregate output does the consumption curve cross the 45° line?Explain your answer and show this on the graph.
When the consumption function lies above the 45-degree line, households * O Spend on consumption an increasing percentage of any increase in income O Spend on consumption a decreasing percentage of any increase in income O Are dissaving O Save all of any increase in income
The accompanying graph represents the aggregate consumption function for the small island nation of Pineapple Paradise. The people of Pineapple Paradise expect their future 10,000 disposable income to increase. Use the graph to show an 9,000 increase in consumption expenditures. 8,000 7,000 What is the new level of aggregate autonomous consumer ,000 Aggregate Consumption Function spending? ,000 $2000 4,000 $4000 3,000 $1000 O $3000 2,000 1,000 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 Disposable Income Çonsumer Spending,
1) In the IS equation why wasnt G in the calculations. 2)Suppose that with all exogenous variables, including T and M at their original values, households become less confident about the future and reduce their autonomous level of consumption from 200 to 150. Solve for the new values of e, Y and NX. With the help of graphs, explain very carefully the mechanisms by which a new equilibrium is reached. 3)Suppose that with all exogenous variables at their original values, the autonomous part of money demand increases to 70. Solve for the new values of e, Y and NX. With the help of graphs, explain very carefully the mechanisms by which a new equilibrium is reached.
If Carol's disposable income increases from $1,200 to $1,700 and her level of saving increases from minus $100 to a plus $100, her marginal propensity to O save is 3/5. O consume is 1/2. O consume is 3/5. O consume is 2/5.
You are an economic advisor to the government. Discuss your opinion . a) How COVID-19 pandemic will affect the consumption behavior as well as the investment done by the firms and household for the next two years? b) What are the actions or policies that the government can implement to face this situation? please answers with analysis and --graph (if possible)
Consider the model in chapter 3. Suppose the consumption equation is represented by the following function: C=250 +0.5YD. I-50, G-T-100. Given the above information,, we know that equilibrium consumption is O O O 600 450 800 550 650
1f the Consumption funchon, espressedas C=30+0,7Yd, chayes to C=20+028Yd. which of the fellowing will accaur? OThe Cansumption function Shifts.doon in. Parallel. 6 its slope Anckeases as the Consumpion functionmaes up O Hs Slape ockeases as the Sausing function. slides up its Slope 1wereases as the Consumption function. slides dacana O it sope deExeAses as the Saurisq function. sltdes down. the Sauting
Figure 7.1 C b. 100 In Figure 7.1, all of the following is true except: An additional dollar of income always induces some additional consumption. O There is some level of consumption that is independent of income. O The marginal inclination to consume is greater than zero. O At zero income there is zero consumption.
these bottom two are solved I am just struggling with how to graph the consumption function and the breakeven condition for this problem and to Point out the income and consumption values relevant for these problems: 3. The marginal propensity to consume (MPC) is 0.75, which means that households spend 75% of each additional dollar of income. The starvation-level consumption is 6, which means that households will consume at least 6 dollars, regardless of their income. Therefore, the amount that households will save can be found by subtracting their minimum consumption level from their gross income, multiplying the difference by the MPC, and subtracting the lump-sum tax: Savings = (1 - MPC) * (Gross Income - Starvation-level Consumption) - Lump-sum Tax Savings = (1 - 0.75) * (40 - 6) - 10 Savings = 0.25 * 34 - 10 Savings = 1.5 Therefore, households will save $1.5. 3. a) How should the lump-sum income tax change to allow households to save 3? To allow households to save…
If average income goes from $30,000 to $33,000 and consumption increases from $29,000 to $31,000, the marginal propensity to consume is Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. 67 b 1.5 1.06 0.96
Explain the term random walk in consumption. Under what conditions will consumption follow such a behaviour?.