Question: Define MPC and MPS .Given the consumption function: C=100+0.75 Yd , where Y=2000 and Tax rate=5% (i) Compute disposal income( Yd ), savings(S) and consumption(C)

Define MPC and MPS .Given the consumption function: C=100+0.75 Yd , where Y=2000 and Tax rate=5% (i) Compute disposal income( Yd ), savings(S) and consumption(C) (ii) Compute APC and APS. Show that APC+APS=1 (iii) Prove that, MPC+MPS =1

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Economics Questions!

m. Given your answer to the previous part, what is the size of the marginal propensity to spend? Interpret it. n. Solve for equilibrium national income and indicate here every step you take. What are...

Consider the following Keynesian consumption function: = 30 + 0.4, keeping in mind that indicates disposable income, which can be allocated only between consumption needs and savings. a. Derive the...

Consider the following consumption function:=30+0.4, keeping in mind that indicates disposable income, which can be allocated only between consumption needs and savings. Derive the equation for...

Solution pls. Assuming that Y or Yd = P1250 and C = P1000, compute for APC & APS and interpret each. Disposable income increased by P525 which caused consumption spending to increase by P330, compute...

Consider the following consumption function: El. c = so + can, keeping in mind that YD indicates disposable income. which can be allocated only between consumption needs and savings. Derive the...

A. Compute the multiplier if a) mpc = 0.95 b) mpc = 0.85 c) mpc = 0.6 d) what kind of relationship exists between the mpc and the multiplier? B. If Ca = 2500 and mps = 0.2, derive a) formulate the...

now//You are asked to price some options on KYC stock. KYC's stock price can go up by 15 percent every year, or down by 10 percent. Both outcomes are equally likely. The risk free rate is 5 percent,...

KYC's stock price can go up by 15 percent every year, or down by 10 percent. Both outcomes are equally likely. The risk free rate is 5 percent, and the current stock price of KYC is 100. (a) Price a...

Homework Three Answer the following questions: 1. Define real interest rate with appropriate example. Explain how the Fisher Effect may leave the Real Interest rate unchanged. (Chapter 10) 2. Define...

Define MPC and MPS. Suppose at a given time, the MPC is .8. What will be the multiplier? Explain with an appropriate example.

The active ingredient in Tums antacid tablets is calcium carbonate, which neutralizes stomach acid according to the following reaction: CaCO3(s) + 2HCl(aq) HO(1) +CaCl(aq) + CO(g) a. Stomach acid is...

Insert "C" or "g" in the blank to make the statement true. {h, j, p) _ {h, j, p} Select one: O a. O b. C

Using the results of Exercise 4.21 on page 118, find the variance of g(X) = X2, where X is a random variable having the density function given in Exercise 4.12 on page 117.

11.15 Management has stated that it will tolerate one stockout per year. The forecast of annual demand for a particular SKU is 100,000 units, and it is ordered in quantities of 10,000 units. The lead...

2. In what way can we say that method affects the result we get?

4. In what way will relationships in a system influence what is reported?

3. Mention three examples where you distorted information that you had taken from your memory and where others made you aware of the fact that you had distorted the information. Did it create a...