A simple closed economy with no government has autonomous consumption expenditures of $80 million and a marginal propensity to consume of 0.60
.
The level of consumption if income is $150 million is $---200, 170, or
215 million.
To calculate the level of consumption when income is $150 million, we need to use the equation:
Consumption = Autonomous Consumption + (Marginal Propensity to Consume x Income)
Given that the autonomous consumption expenditures are $80 million and the marginal propensity to consume is 0.60, we can substitute these values into the equation:
Consumption = $80 million + (0.60 x $150 million)
Consumption = $80 million + $90 million
Consumption = $170 million
Therefore, the level of consumption when income is $150 million is $170 million.
b. The level of consumption when income is $225 billion is $---million
Using the same equation as before:
Consumption = Autonomous Consumption + (Marginal Propensity to Consume x Income)
We substitute the given values:
Consumption = $80 million + (0.60 x $225 billion)
However, we have to convert the income from billions to millions:
$225 billion = $225,000 million
Now we can calculate:
Consumption = $80 million + (0.60 x $225,000 million)
Consumption = $80 million + $135,000 million
Consumption = $135,080 million
Therefore, the level of consumption when income is $225 billion is $135,080 million.
no the answer is 215M-->80+(.6*225)=215M. Ifollow the steps you show me eaier
Apologies for the mistake in my previous response. You are correct.
Using the correct equation:
Consumption = Autonomous Consumption + (Marginal Propensity to Consume x Income)
Substituting the given values:
Consumption = $80 million + (0.60 x $225 million)
Calculating:
Consumption = $80 million + $135 million
Consumption = $215 million
Therefore, the level of consumption when income is $225 million is $215 million.
To calculate the level of consumption when income is $150 million, we will use the formula:
Consumption = Autonomous consumption + (Marginal propensity to consume × Income)
Given:
Autonomous consumption expenditures = $80 million
Marginal propensity to consume = 0.60
Income = $150 million
Substituting the given values into the formula:
Consumption = $80 million + (0.60 × $150 million)
Consumption = $80 million + ($90 million)
Consumption = $170 million
Therefore, the level of consumption when income is $150 million is $170 million.
To find the level of consumption when income is $150 million, we need to use the marginal propensity to consume (MPC) and autonomous consumption expenditures.
The formula to calculate consumption is:
Consumption = Autonomous Consumption + (MPC * Income)
Given that the autonomous consumption expenditures are $80 million and the MPC is 0.60, we can substitute these values into the formula:
Consumption = $80 million + (0.60 * $150 million)
Calculating this expression:
Consumption = $80 million + ($90 million)
Consumption = $170 million
Therefore, the level of consumption when income is $150 million is $170 million.