Posted by **fefe** on Wednesday, November 8, 2006 at 10:40am.

Economicsts frequenly use linear models as approximations fpr more complicated models. In Keynesian macroeconomics theory, total consumption expendiure on goods and services, C, is assumed to be a linear functions of national income, I. The table gives the values of C, and I for 1990 and 1997 in the united states.

year 1990 1997

total consumption (c) - 3839 - 5494

National Income (I) - 6650 - 4215

a. Find the formula for C as a function of I.

b. The slope of the linear function is called the marginal propensity to consume. What is the marginal propensity to consume for the United State from 1990- 1997 ?

Please recheck your numbers. The 4215 doesn't look right. It implies that consumption increased while income dropped in 1997. The number 9215 would fit a linear model much better than 4215.

those are the numbers on my paper

Check your numbers. You have total consumption rising from 90 to 97, while national income is falling

## Answer This Question

## Related Questions

- Economics - I have a question about the marginal utility theory If someone is at...
- math - A tire company determines that to manufacture a certain type of tire, it ...
- Economics - 14. The life-cycle hypothesis and Permanent Income Hypothesis ...
- Science - Why do scientists use models of natural systems? a. Scientists use ...
- Science - Why do scientists use models of natural science? A) Scientists use ...
- statistics 2 - A Keynesian Consumption Function: In his famous 1936 book, A ...
- Social Studies - Could you please check the definition that matches with the ...
- Science - Q1: Why do scientist use models? A.) Scientist use models to learn ...
- ECONOMICS - Need examples of topics dealing with 2 Economic Concepts.... Meaning...
- science - Why do scientists use models? a. Scientists use models to learn about ...

More Related Questions