ECN 204 Chapter 10-11: Chapter 10 and 11

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8 Feb 2017

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Average propensity to consume (apc): the fraction (or percentage) of disposable income that households plan to spend for consumer goods and services. Average propensity to save (aps): the fraction (or percentage) of disposable income that households plan to spend for consumer goods and services. Marginal propensity to consume (mpc): the fraction (or percentage) of any change in disposable income spent for consumer goods. Marginal propensity to save (mps): the fraction (or percentage) of any change in disposable income that households save. The investment demand curve: reflects an inverse (negative) relationship between the real interest rate and investment. Initial costs of capital good and the estimated cost of operating and maintaining those goods. For example if lower electricity costs associated with operating equipment shift the investment demand curve to the right but if cost are higher it will shift the curve to the left.

Related Questions

(Answer the following questions based on the given data.)

**Please show work/formulas**

Consumption and Savings Schedule

Complete the following schedule (savings, APC, APS, MPC, & MPS):

DI	C	S	APC	APS	MPC	MPS
240	244
260	260
280	276
300	292
320	308
340	324

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

What are the 2 main tools the government can use with fiscal policy?

What is the goal of expansionary fiscal policy and how is it achieved?

What is the current level of total public debt for the United States, and what percent is foreign-owned?

The following table is a consumption schedule. Assume taxes and transfer payments are zero and that all saving is personal saving.

(GDP = DI)	C	S	APC	APS
$1,500	$1,540	$_____	1.027	–0.027
$1,600	$1,620	_____	1.013	–0.013
$1,700	$1,700	_____	_____	_____
$1,800	$1,780	_____	0.989	0.011
$1,900	$1,860	_____	0.979	0.021
$2,000	$1,940	_____	_____	_____
$2,100	$2,020	_____	0.962	0.038
$2,200	$2,100	_____	_____	_____

Compute saving at each of the eight levels of disposable income and the missing average propensities to consume and to save.

1. The break-even level of disposable income is $________.

2. As disposable income rises, the marginal propensity to consume remains constant. Between each two GDPs the MPC can be found by dividing $________ by $________, and is equal to _______.

3. The marginal propensity to save also remains constant when the GDP rises. Between each two GDPs the MPS is equal to $________ divided by $________, or to _______.

goldreindeer163

The average propensity to consume (APC) equals

the change in real disposable income divided by the change in consumption expenditures.

the change in consumption expenditures divided by the change in real disposable income.

real disposable income divided by consumption expenditures.

consumption expenditures divided by real disposable income.

The consumption function shows how much

households plan to consume per year at each level of real disposable income.

households plan to consume per year at each level of savings.

households plan to consume per year at each possible interest rate.

real disposable income people will earn at each income tax bracket.

Saving is

the accumulation of past periods of savings while savings is the amount of disposable income that is not consumed in a given period of time.

the amount one does not consume in a given period of time while savings is the accumulation of past periods of saving.

the difference between disposable income and spending on goods and services while savings is the difference between real GDP and disposable income.

the difference between real GDP and disposable income while savings is the difference between disposable income and consumption spending.

Thinking as an economist would, which is true of investment?

		Investment represents spending on capital goods.
		Investment is a stock concept.
		Investment is putting money into stocks and bonds.
		It is the portion of disposable income that is not used for consumption or saving.

An appreciation of the U.S. dollar ________ the price of U.S. imports, and ________ the price of U.S. exports.

		lowers, lowers
		increases, increases
		increases, lowers
		lowers, increases

QUESTION 33

Other things being equal, if input prices rise in a country, then there would be

		cost-push inflation.
		demand-pull inflation.
		cost-push deflation.
		more production and a lower price level.

mauvetortoise195

ECN 204 Chapter 10-11: Chapter 10 and 11

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