Post a New Question

math

posted by .

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

First Name
School Subject
Your Answer

Related Questions

More Related Questions

Post a New Question