Suppose an economy is defined by the following: C = 210 + 0.8 (Yd). This algebraic...
Homework Answers
Ans . Consumption function
Consumption function describes relationship between consumption and disposable income.
Yd is disposable income.
0.8 is marginal propensity to consume.
210 is autonomous consumption.
Do ans is that this equation represents consumption function
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Suppose an economy is defined by the following: C = 210 + 0.8
(Yd). This algebraic...
Imagine the economy is defined by the consumption function of C = 140 + 0.9 (Yd)...
Imagine the economy is defined by the consumption function of C = 140 + 0.9 (Yd) where 140 is autonomous consumption, 0.9 is marginal propensity to consume, and Yd is disposable income (after taxes) and Yd=Y-T, where Y is national income (or GDP) and T=Tax Revenues=0.3Y (0.3 is the avg. income tax rate). To find the macro equilibrium use the following equation Y = C + I + G + (X - M). Where C=140 + 0.9(Yd), I=400, G=800, X=600,...
Suppose an economy is defined by the following: C = 108 + 0.6 (Yd). The 108...
Suppose an economy is defined by the following: C = 108 + 0.6 (Yd). The 108 in this algebraic equation represents the ________.
QUESTION TWO An economy is represented by the following set of equations: Y = C +...
QUESTION TWO An economy is
represented by the following set of equations: Y = C + I C = 80m +
1.6Y where Y represents aggregate expenditure C represents
consumption expenditure by households I represents investment
expenditure by firms M is millions of Ghana cedis (a) (i) Explain
why the model is not an open economy? (2 marks) (ii) Explain
investment expenditure (I) as used in the model. (3 marks) (b)
Using the consumption function, estimate the autonomous
consumption; marginal...
uestion #1:Solving for the Goods MarketSuppose an economy can be described by the following set of...
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...
Suppose the following table describes the relation of consumption spending to the disposable income Disposable Income...
Suppose the following table describes the relation of consumption spending to the disposable income Disposable Income (Yp)|400 500 600 700 800 Consumption ( 390 470 550 630 710 (a) Derive the consumption function. Explain the two components of (e) What is the level of saving when the level of income equals to $900, to $350, to $300? Redraw the graphs from points (a) and (d) and show the areas of saving and dissaving. (f) Suppose income grows from $850 to...
1. Suppose that the MPC is equal to 0.8 and autonomous consumption spending is 400. Then the consumption function is given by a. C = 400 - 0.8Yd b. C = -400 + 0.2Yd c. C = 320 x Yd d. C = 400 + 0.8Yd e. C = 400 + 0.2Yd 2. Suppose th
1.Suppose that the MPC is equal to 0.8 and autonomous consumption spending is 400. Then the consumption function is given bya.C = 400 - 0.8Ydb.C = -400 + 0.2Ydc.C = 320 x Ydd.C = 400 + 0.8Yde.C = 400 + 0.2Yd2.Suppose that the MPC is equal to 0.8 and autonomous consumption spending is 400. At what level of income is saving = 0?a.400b.500c.2000d.320e.12003.The saving functiona.. is an upward-sloping straight line with a vertical intercept of -C0 and a slope of...
For a hypothetical economy, suppose the consumption equation is C = 30 + 0.65Y, where C...
For a hypothetical economy, suppose the consumption equation is C = 30 + 0.65Y, where C is households’ consumption and Y is disposable income. If the disposable income is $600, carefully show your steps and calculate: The levels of (i) consumption and (ii) saving. The marginal propensity to (i) consume and (ii) save. The average propensity to (i) consume and (ii) save. Interpret your estimates in (c).
Assume that Miriam’s consumption function is C = a + b(Y d), where Y d =...
Assume that Miriam’s consumption function is C = a + b(Y d),
where Y d = (Y − T ) is disposable income, defined as the
difference between income Y and taxes T. You observed that, after
an increase in taxes T by $80, Miriam’s consumption C decreased by
$60. If Miriam’s income (Y ) did not change, you can deduce that
her marginal propensity to consume (MPC) is
23. Assume that Miriam's consumption function is C = a +b(yd),...
Suppose that the marginal propensity to consume is dC dy = 0.8 -e-0.27 (in billions of...
Suppose that the marginal propensity to consume is dC dy = 0.8 -e-0.27 (in billions of dollars) and that consumption is $8.5 billion when disposable income is $0. Find the national consumption function. C(y) =
Answer the following questions using the aggregate expenditures model of the economy described below. C =...
Answer the following questions using the aggregate expenditures model of the economy described below. C = 900 + 0.5 Yd T=95 1 = 300 G = 300 X = 350 M = 0.1 Y (a) What are the marginal propensity to consume Number , and the marginal propensity to import Number (b) What is the marginal propensity to save? Number (c) The saving function is: S = Number + Number Yd. (d) What is the value of Ye? Number (e)...
QUESTION TWO An economy is
represented by the following set of equations: Y = C + I C = 80m +
1.6Y where Y represents aggregate expenditure C represents
consumption expenditure by households I represents investment
expenditure by firms M is millions of Ghana cedis (a) (i) Explain
why the model is not an open economy? (2 marks) (ii) Explain
investment expenditure (I) as used in the model. (3 marks) (b)
Using the consumption function, estimate the autonomous
consumption; marginal...
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...
Suppose the following table describes the relation of consumption spending to the disposable income Disposable Income (Yp)|400 500 600 700 800 Consumption ( 390 470 550 630 710 (a) Derive the consumption function. Explain the two components of (e) What is the level of saving when the level of income equals to $900, to $350, to $300? Redraw the graphs from points (a) and (d) and show the areas of saving and dissaving. (f) Suppose income grows from $850 to...
Assume that Miriam’s consumption function is C = a + b(Y d),
where Y d = (Y − T ) is disposable income, defined as the
difference between income Y and taxes T. You observed that, after
an increase in taxes T by $80, Miriam’s consumption C decreased by
$60. If Miriam’s income (Y ) did not change, you can deduce that
her marginal propensity to consume (MPC) is
23. Assume that Miriam's consumption function is C = a +b(yd),...
Suppose that the marginal propensity to consume is dC dy = 0.8 -e-0.27 (in billions of dollars) and that consumption is $8.5 billion when disposable income is $0. Find the national consumption function. C(y) =
Answer the following questions using the aggregate expenditures model of the economy described below. C = 900 + 0.5 Yd T=95 1 = 300 G = 300 X = 350 M = 0.1 Y (a) What are the marginal propensity to consume Number , and the marginal propensity to import Number (b) What is the marginal propensity to save? Number (c) The saving function is: S = Number + Number Yd. (d) What is the value of Ye? Number (e)...
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