HomeworkLib
Question

The sum of MPC and the MPS must equal 1 because all additional income must be...

The sum of MPC and the MPS must equal 1 because

  • all additional income must be spent or saved.

  • these are determined by macro policy makers.

  • when they equal one the economy is in equilibrium.

  • total income must be spent or saved.

business   economics   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

MPC meaning marginal propensity to consume and MPS means marginal propensity to save

Ideally in the closed economy when there is income then its value will be lie between 0 and 1

And their sum give the value of all additional income, not total income that must be spent or saved and which is equal to 1

So the answer is an option A

0 0
Add a comment
Know the answer?
Add Answer to:
The sum of MPC and the MPS must equal 1 because all additional income must be...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • Use the table below to determine the MPC and MPS. Disposable Income Consumption Saving $1000 $1100...

    Use the table below to determine the MPC and MPS. Disposable Income Consumption Saving $1000 $1100 -$100 2000 1600    400 3000 2100    900 1. Using the above information, what is the MPC and MPS when the DI is 3000? MPC =                                                MPS = 2. What equation could you use to determine the Multiplier, using MPC and MPS? Multiplier = Multiplier = 3. If there is an initial investment spending of $5,000; what would the total change in GDP...

  • 1) Determining monetary policy goals is difficult because: A. Policy makers must recognize that monetary policy...

    1) Determining monetary policy goals is difficult because: A. Policy makers must recognize that monetary policy should be changed B. The most appropriate action must be determined and implemented C. Policy initiatives must be timed to achieve the desired influence upon the economy D. All of the above 2) Federal law requires that the Fed Select one: A. report to the Congress regarding the economy and price stability twice each year. B. meet target ranges for growth in the money...

  • The MPC is A) the change in consumption divided by the change in income. B) consumption divided by income. C) the c...

    The MPC is A) the change in consumption divided by the change in income. B) consumption divided by income. C) the change in consumption divided by the change in saving. D) the change in saving divided by the change in income. The MPS is A) the change in saving divided by the change in income. B) 1 + MPC C) income divided by saving. D) total saving divided by total income Saving equals A) Y-C. B) Y - planned 1....

  • 13. The reason for the multiplier effect is that a. one person's additional expenditure constitutes a...

    13. The reason for the multiplier effect is that a. one person's additional expenditure constitutes a new source of income for another person, and this additional income leads to still more spending, and so on. b. changes in government spending typically deepen recessions or exacerbate inflationary conditions in the economy. c. businesses make decisions about investment projects based on anticipated profits. d. additional spending lowers the real interest rate and leads to further borrowing and spending by businesses. 14. If...

  • just answers 19 An increase il SI00. Which of the foll the MPC is 0.5 and...

    just answers 19 An increase il SI00. Which of the foll the MPC is 0.5 and the increase in invesu the MPC is 0.5 and the increase in investment wd the MPC is 0.75 and the increase in investment was 25 the MPC is 0.75 and the increase in investment was 20 Assuming the new equilibrium income level is $400 and the level of full employment income is S600, there would be a: deflationary gap of $50 deflationary gap of...

  • 1. The Average Propensity to Consume: C/Y C/Yd delC/delYd delC/Y 2.MPS+MPC+APS+APC = 1 2 No way...

    1. The Average Propensity to Consume: C/Y C/Yd delC/delYd delC/Y 2.MPS+MPC+APS+APC = 1 2 No way of knowing 0 3. A budget surplus is when T>G Then budget is balanced G>T T=G 4.Who sets the required reserve ratio? The required portion of assets that must be kept by banks The required portion of money that must be kept by banks The required portion of loans that must be kept by banks The required portion of deposits that must be kept...

  • Question 12 1 pts The fraction, or percentage, of total income that is consumed is called...

    Question 12 1 pts The fraction, or percentage, of total income that is consumed is called the break-even income. consumption schedule. marginal propensity to consume. average propensity to consume. Question 14 1 pts The effect of a decline in taxes on the level of income will differ somewhat from an increase in government expenditures of the same amount because tax declines tend to be more expansionary households may not spend all of an increase in disposable income. the MPC that...

  • Policy makers devise a welfare program where benefits are reduced when additional income is received. If...

    Policy makers devise a welfare program where benefits are reduced when additional income is received. If a person on welfare does not work at all, they will receive $400 a month. But, for every dollar they earn, benefits will be reduced by 30 cents. Suppose that the hourly wage rate is $8. (a) (3 points) If a person works for 120 hours in a month, what will the total income be? (b) (3 points) How many hours must a person...

  • please show all work, thanks! 1. A tax rebate that returns a certain amount of money to taxpayers can result in spending that many times this amount. This phenomenon is known in economics as the multi...

    please show all work, thanks! 1. A tax rebate that returns a certain amount of money to taxpayers can result in spending that many times this amount. This phenomenon is known in economics as the multiplier effect. It occurs because the portion of the rebate that is spent by one individual becomes income for one or more others who, in turn, spend some of it again, creating income for yet other individuals to spend. If the fraction of income that...

  • QUESTION 3: KEYNESIAN MODEL (7 POINTS) (You must show all steps of your calculations to get...

    QUESTION 3: KEYNESIAN MODEL (7 POINTS) (You must show all steps of your calculations to get credit for each item of this question; otherwise, you will be deducted marks) ANSWER THE FOLLOWING QUESTIONS BASED ON THE KEYNESIAN ECONOMY DESCRIBED IN THE TABLE BELOW. ALL FIGURES ARE IN $ BILLIONS. (2 points) A. Fill in the blanks in this table, making the usual assumptions presented in the Keynesian theory (Chapter 9). All figures are in $ billions. (1 point) B. Calculate...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
Active Questions
ADVERTISEMENT