Answer to Question #95565 in Macroeconomics for Jaiinder Grewal

Question

You are given the following data about an economy that has a fixed price level.
Disposable Income (billions of dollars) Consumption Expenditure (billions of
dollars)
0 5
100 80
200 155
300 230
400 305
a) Calculate the marginal propensity to consume.
b) Calculate autonomous consumption expenditure.
c) Calculate the multiplier.
d) Calculate the increase in real GDP when autonomous spending increases by $5
billion. Why does real GDP increase by more than $5 billion?

Answer 1

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