ECON 1P92 Lecture Notes - Consumption Function
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8 Nov 2013
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(Answer the following questions based on the given data.) **Please show work/formulas**
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Key: DI = Disposable Income, C=Consumption, S=Saving, APC = Average Propensity to Consume, APS=Average Propensity to Save | ||||||||||||
MPC=Marginal Propensity to Consume, MPS=Marginal Propensity to Save |
2. | What are the 2 main tools the government can use with fiscal policy? |
3. | What is the goal of expansionary fiscal policy and how is it achieved? |
4. | What is the current level of total public debt for the United States, and what percent is foreign-owned? |
Calculate the marginal propensity to consume (MPC) and the marginal propensity to save (MPS). Fill in the blanks in the following table. Show that the MPC plus the MPS equals 1.
National Income & Real GDP | Consumption | Saving | MPC | MPS |
$9,000 | $8,000 | |||
$10,000 | $8,600 | |||
$11,000 | $9,200 | |||
$12,000 | $9,800 | |||
$13,000 | $10,400 |