Consider the following table showing aggregate consumption expenditures and disposable income. All values are expressed in billions of constant dollars.

a. Compute the average propensity to consume for each level of income and fill in the table.

b. Compute the marginal propensity to consume for each successive change in income and fill in the table.

c. Plot the consumption function on a scale diagram. What is its slope?

Transcribed Image Text:

Desired Disposable Consumption MPC Income (Yp) (C) == APC C/YD AC/AYD 0 150 100 225 200 300 300 375 400 450 500 525 600 600 700 675 800 750