From 2009 to 2014, Eastlandia experienced large fluctuations in both aggregate consumer spending and disposable income, but

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From 2009 to 2014, Eastlandia experienced large fluctuations in both aggregate consumer spending and disposable income, but wealth, the interest rate, and expected future disposable income did not change. The accompanying table shows the level of aggregate consumer spending and disposable income in millions of dollars for each of these years. Use this information to answer the following questions.

le inco | Consumer spend me (millions of | ing (millions of Year dollars) dollars)

2009 $100 $180 2010 350 380 2011 300 340

(2012 ‘400 420 2013 375 400 2014, 500 500

a. Plot the aggregate consumption function for Eastlandia.

b. What is the marginal propensity to consume? What is the marginal propensity to save?

c. What is the aggregate consumption function?

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Economics

ISBN: 9781319181949

5th Edition

Authors: Paul Krugman, Robin Wells

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