MPC may also vary based on income or wealth. Lower-income households typically have a higher MPC because they allocate a larger proportion of their income to basic necessities like food, housing, and healthcare. Higher-income households tend to have a lower MPC as they allocate more of their ...
Explain how to find the multiplier. 1) The consumption function is C = 100 +0.75(Y-T) a) What is the marginal propensity to consumers? b) What is autonomous consumption? c) What is disposable income? 2) The consumption function is C How does income distribution effect consumption ...
Explain the reason for equality between slope of the consumption function with MPC. Suppose an economy can be described by the consumption function C = 75 + 0.80YD and I = $50. Explain how to find the multiplier. Explain the relationship among house...
Why will real GDP tend to rise when government spending and taxes rise by the same amount? The MPC is 0.25. Find the spending multiplier. If government spending is increased by $100,000, by how much will real GDP increase? When the economy is in an expansion, what d...
Marginal Propensity to Consume Formula | How to Calculate MPC from Chapter 7 / Lesson 5 107K This article covers the marginal propensity to consume, how to calculate MPC, and its relation to the marginal propensity to save and the multiplier effect. Related...
Explain how to find the multiplier. Suppose that Barbara's preferences for bags of nuts (the x-good) and raisins (y-good) can be represented with the utility function u(x,y) = 0.5x +3 sqrt{y}. The Marshallian demand fun...
If the marginal propensity to consume (MPC) is 0.75, the value of the spending multiplier is what? How do you find the marginal product given a production function? If the inverse demand function is: p = 360 - 2Q What is the marginal revenue function? Draw the demand and ma...
Explain the significance of consumer behavior to the economy in terms of marginal utility, total utility, and diminishing utility on the economy. Describe the relationship between the marginal propensity to consume (MPC) and multiplier (m).
Explain why markets under allocate resources towards the production of a good with positive externalities present. Use two graphs, one of a PPF and the other of a market, to illustrate. How is the Keynesian expenditure multiplier implicit in the Keynesian version of the AD/AS model? Explain an...
Answer and Explanation:1 When the government runs a deficit, it becomes hard to borrow funds since the credit rating is low. If the government needs money but runs a budget...