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April 25, 2014

Homework Help: Economics

Posted by Bo on Friday, July 11, 2008 at 12:32pm.

consumption function, C=5+0.75*(Y-T). Y is,national income and T is government taxes.

a What is the marginal propensity to consume?

b If disposable income is 100, what are consumers' savings?

c What form might a "consumption shock" take given the structure of this
consumption function?

d If each individual consumer had the same consumption function, would a
government transfer program, such as a social security, affect aggregate
consumption?

e (T/F) If the government were to cut taxes T by 15 units and Y were to
stay the same, aggregate demand would increase by 11.25.

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