Question
on a piece of graph paper, construct the consumption function for simpleland from the data given below. year consumption disposable spending income (di) 1991 1,200
on a piece of graph paper, construct the consumption function for simpleland from the data given below. year consumption disposable spending income (di) 1991 1,200 1,500 1992 1,440 1,800 1993 1,680 2,100 1994 1,920 2,400 1995 2,160 2,700 a. determine the marginal propensity to consume (mpc). b. in which direction will the consumption function for simpleland shift if the price level rises? c. in 1995, several tax bills were debated in congress that would have provided greater tax incentives for saving. (none were enacted.) if such saving incentives had been enacted, and had been successful, how would the consumption function have shifted? d. explain why permanent tax cuts are likely to lead to bigger increases in consumer spending than are temporary tax cuts.
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