From 2009 to 2014, Eastlandia experienced large fluctuations in both aggregate consumer spending and disposable income, but

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From 2009 to 2014, Eastlandia experienced large fluctuations in both aggregate consumer spending and disposable income, but wealth, the interest rate, and expected future disposable income did not change. The accompanying table shows the level of aggregate consumer spending and disposable income in millions of dollars for each of these years. Use this information to answer the following questions.

Disposable income (millions of dollars) Consumer spending (millions of dollars) Year $100 $180 2009 350 2010 380 2011 30


a. Plot the aggregate consumption function for Eastlandia. 

b. What is the marginal propensity to consume? What is the marginal propensity to save?

c. What is the aggregate consumption function?

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Macroeconomics

ISBN: 978-1319120054

3rd Canadian edition

Authors: Paul Krugman, Robin Wells, Iris Au, Jack Parkinson

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