Guideline Saving 2, (3, National Income 1. Only one of the lines in this graph does not represent the savings function. It is: V A. Line No. 1 B. Line No. 2 C. Line No. 3 D. Line No. 4 2. If the marginal propensity to consume increase which one of the following sentences represent the movement of the savings function. A. from Line No. 2 to line No.1 B. from Line No. 3 to line No.2 C. from Line No. 2 to line No. 3 D. from Line No. 4 to line No.3
Q: 1. Y = C + 1 + G + (X – Z) C = Co + bY I = 1, + aY G = Go Z = Z. X = Xo In the national income model…
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A: MPC=1/MPS MPS=15-12=3 =1/3=0.3 Therefore MPC=0.3.
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A: This will be explained below:
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A: Answer: Hence income i.e I = 600
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A: Note: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question…
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- 3. The consumption function Suppose that national income in a country is $30 billion, taxes paid by households is $10 billion, household consumption is $18 billion, and the marginal propensity to consume (MPC) is 0.8. On the following graph, use the blue line (circle symbol) to plot the economy's consumption function. CONSUMPTION (Billions of dollars) 50 45 40 35 30 25 20 15 10 5 0 0 5 + + + 10 15 20 25 30 35 40 DISPOSABLE INCOME (Billions of dollars) O $25.2 billion $26.8 billion $24.4 billion 45 0.8, Suppose now that country's national income increases to $34 billion. Assuming the amount paid in taxes is fixed at $10 billion and that MPC = what will be the new household consumption? $21.2 billion 50 Consumption Function (?)3. The following table shows income (Y) and consumption (C): Y C Calculate: 100 105 125 I. Marginal Propensity to Consume (MPC) II. Marginal Propensity to Save (MPS) 160 III. Average propensity to save (APS) 200 110 125 1401. a. Explain consumption and saving function by using numerical example and diagram.
- The following table shows data for the economy before the decrease in saving. Suppose that the decrease in saving causes consumption to rise from $280 million to $320 million. Assume Say's law holds in this economy. Fill in the data for the economy after the decrease in saving. Before Saving Decrease After Saving Decrease Consumption (C) $280 million $320 million Investment (I) $200 million $ million Government Purchases (G) $250 million $ million Exports (EX) $500 million $500 million Imports (IM) $300 million $300 million As a result of the decrease in saving, total expenditures will .1. Suppose the households in a hypothetical economy has the following consumption function C= a + cYd. Where is the disposable income. The government in this economy imposes a tax rate of to households’ income (ex. A means that 10% of households’ income goes to tax payments). a. What is the equation that describes the disposable income of households? b. What is the Planned Expenditure Equation? Assume that government expenditure is exogenous and Investment function is given by the equation I = I-br Where is the interest rate. c. Derive the equilibrium output in the goods market and show that the multiplier in this model is 1/1c(1-t). d. How does and the tax rate affects this multiplier (e.g., what happens to multiplier if c increases cet.par. , or if tax rate increases, cet.par)?Step 2: The Effect of Saving on Total Expenditures The following table shows data for the economy before the decrease in saving. Suppose that the decrease in saving causes consumption to rise from $280 million to $320 million. Assume Say's law holds in this economy. Fill in the data for the economy after the decrease in saving. Before Saving Decrease $280 million $200 million $250 million $500 million $300 million Consumption (C) Investment (I) Government Purchases (G) Exports (EX) Imports (IM) As a result of the decrease in saving, total expenditures will After Saving Decrease $320 million million million $500 million $300 million
- 1. Use the following table with information on the consumption behavior of the people of Gotham to answer the following questions: Disposable Income Consumption $300 $440 $0 $200 a. What is the value of 'a' or autonomous consumption in this economy? b. What is the value of 'b’ or the Marginal Propensity to Consume (MPC) in this economy? Interpret the meaning of this MPC value in one sentence.*4. Data on before-tax income, taxes paid and consumption spending (on domestic goods and services) for the Simpson family in various years are given below. BEFORE-TAX INCOME (S) TAX PAID (S) CONSUMPTION SPENDING (S) 3000 3500 3700 4000 25 000 27 000 28 000 30 000 20 000 21 350 22 070 23 600 a. Graph the Simpsons's consumption function and find their household's marginal propensity to consume. b. How much would you expect the Simpsons to consume if their income was $32 000 and they paid taxes of $5000? c. Homer Simpson wins a lottery prize. As a result, the Simpson family increases its consumption by $1000 at each level of after-tax income. ("Income' does not include the prize money.) How does this change affect the graph of their consumption function? How does it affect their marginal propensity to consume?3. If the consumption function is C= $200 billion + 0.9Y, a) How much do consumers spend with income of $3 trillion? b) How much do they save?
- 2. Public consumption of a country (two sectors) is indicated by the function C = 60 + 0.4Y. Calculate:a. Find the saving function.b. If the investment that occurs is 300, determine the balance national income.c. What is the consumption of the people of the country if the national income is 400.d. How much is the savings of the people of the country if the national income is 400.e. Make a graphical sketch of the consumption and saving functions in one image. Please solve sub parts a,b,c thank u2. Public consumption of a country (two sectors) is indicated by the function C = 60 + 0.4Y. Calculate:a. Find the saving function.b. If the investment that occurs is 300, determine the balance national income.c. What is the consumption of the people of the country if the national income is 400.d. How much is the savings of the people of the country if the national income is 400.e. Make a graphical sketch of the consumption and saving functions in one image. Please solve subparts d,e thank uSuppose you have the following information about a fictitious economy. Assume there are no taxes in this economy. Disposable Income and Consumption Disposable lIncome (dollars) SO Consumption (dollars) $4,000 11,000 8,000 16.000 24,000 32,000 40,000 18,000 25,000 32,000 39,000 structions: In parts a and c, enter your answers as a whole number. In part b, round your answers to