1. According to Keynes, what is the most important determinant of (or influence on) the level of Consumer Spending households undertake in a time period? 2. Use the following Consumption function data to answer the questions below: Real Disposable Income Consumption Saving MPC MPS $100 $150 $200 $200 $300 $250 $400 $300 $500 $350 A. What is Saving if Real Disposable Income = $400. What is Saving if Yd = 500? B. What is the marginal propensity to consume (MPC)? C. What is the marginal propensity to save (MPS)? D. What is the break-even income (level of income at which Saving = 0)? E. What is the mathematical relation between the MPC and the MPS? 3. Suppose most business executives expect a slowdown in the economy (slower sales growth for their firm). How might that affect the economy?
1. According to Keynes, what is the most important determinant of (or influence on) the level of Consumer Spending households undertake in a time period?
2. Use the following Consumption function data to answer the questions below:
Real Disposable Income Consumption Saving MPC MPS
$100 $150
$200 $200
$300 $250
$400 $300
$500 $350
A. What is Saving if Real Disposable Income = $400. What is Saving if Yd = 500?
B. What is the marginal propensity to consume (MPC)?
C. What is the marginal propensity to save (MPS)?
D. What is the break-even income (level of income at which Saving = 0)?
E. What is the mathematical relation between the MPC and the MPS?
3. Suppose most business executives expect a slowdown in the economy (slower sales growth for their firm). How might that affect the economy?
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