Between 2008 and 2009, real disposable income (in 2009 dollars) declined slightly (by $51 billion), owing to

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Between 2008 and 2009, real disposable income (in 2009 dollars) declined slightly (by $51 billion), owing to a recession. Use the data on real consumption expenditures given on the inside back cover of the textbook to compare the change in C to this $51 billion decline in DI. Explain why dividing the two does not give a good estimate of the marginal propensity to consume.

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Economics Principles and Policy

ISBN: 978-1305280595

13th edition

Authors: William Baumol, Alan Blinder

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