Give an example of transitory income. What effect does this income have on the marginal propensity to consume?
Answer to relevant QuestionsWhy would a change in asset or money holdings shift the consumption curve? Calculate the marginal propensity to consume, the marginal propensity to save, and the level of saving for each income level in the accompanying table. Calculate the 2010 and 2011 MPCs for each of the countries when national income falls by 1,000. Describe how the income multiplier works. "The economy's in equilibrium!" Is that necessarily good?
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