Answer:
a) Marginal Propensity to consume is defined as the change in Consumption as our income changes by unit amount.
In this case it is MPC= 0.6
b) Marginal propensity to save is the defined as the change in saving as our income changes by unit amount.
MPS= 1-MPC= (1-0.6)= 0.4
c) Equilibrium level of income can be calculated as the
which can be rewritten as
+ 0.6* Y, and I-$900. Assume that the following equations fully describe an economy: C =...
uestion #1:Solving for the Goods MarketSuppose an economy can be described by the following set of equations:C = 160+(0.6)YDI = 150G = 150T = 100YD= Y -TNX = 0 (g) What is the marginal propensity to consume (mpc)?(h) What is the marginal propensity to save (mps)?(i) Calculate the multiplier. [Hint: The multiplier = 1/(1-mpc)](j) Calculate the level of autonomous spending. [Hint: Autonomous spending = C0+ I + G –(mpc x T)] Question #1: Solving for the Goods Market Suppose an...
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