Suppose when real disposable income is $5,000, planned real consumption is $4000. When real disposable income...
Suppose when real disposable income is $5,000, planned real consumption is $4000. When real disposable income increases to $6000, planned real saving increases by $500. The new planned real consumption expenditures is
A. $5,000. B. $4,500. C. $6,000. D. $3,500.
Homework Answers
Real savings =real disposable income -real consumption
=5000-4000=$1000
After increase real disposable incomei to $6000
Real saving increases by=$1000+500=$1500
New real consumption =new real disposable income-real savings
=$6000-$1500=$4500
Therefore the answer is option B.$4500
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