Use the table below to answer questions #1 and #3.
    Disposable Income (Yd )              Consumption (C)
                   $ 0                                          $ 200
                   1,000                                       1,100
                   2,000                                       2,000
                   3,000                                       2,900
                   4,000                                       3,800
1. Determine the marginal propensity to consume (MPC). ______________
2. Determine the marginal propensity to save (MPS). __________________
3. Determine the level of autonomous consumption. __________________
4. Assume the marginal propensity to consume MPC = .91, determine the marginal propensity to save (MPS). ______________________
Use the table below to answer question #5.
Disposable income (Yd)                 Imports
        $ 500                                       $ 75
        1,000                                         150
        1,500                                         225
        2,000                                         300
5. Determine the marginal propensity to import (MPI). _______________
6. What would cause dissavings? _______________________________________
7. The marginal propensity to consume (MPC) + marginal propensity to save (MPS) will always be equal to. ____________________
8. If U.S. income decreases what will happen to net exports. _____________________
9. If U.S. income taxes increase what will happen to aggregate expenditure. _________
10. If the rate of capacity utilization decrease what will happen to aggregate expenditure. _____________

Answer rating: 100% (QA)

Answer 1 The marginal propensity to consume MPC is calculated by taking the change in consumption divided by the change in disposable income Using the ... View the full answer