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Question 2 An economy has the following consumption function. C = 200, 000 +0.6 x (Y - T) (a) If disposable income increases by $100,
Question 2 An economy has the following consumption function. C = 200, 000 +0.6 x (Y - T) (a) If disposable income increases by $100, what is the change in consumption? ($60) (b) What is the MPC in this economy? (MPC = 0.6). (c) If disposable income is $ 10 million what is the level of consump- tion? ($6.2 mill) (d) If disposable income is $ 10 million what is the APC? (APC 6.2/ 10 = 0.62)
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