Macroeconomics Answers

If 75% of any increase in income is spent on consumption, then an increase in autonomous investment of R1 billion results in an increase in national income of as much as

R5 billion

R1.33 billion

R4 billion

R6 billion

From the TUx (total utility of X) schedule in the following Table derive the MUx (Marginal utility of X) schedule, and (b) plot the TUx and the Mux. Identify the saturation point. 

Qx Tux

0 0

1 100

2 185

3 260

4 325

5 385

6 435

7 480

8 520

9 500

10 480

1. Homer is a street person whose preferences over the two goods he consumes, food (good 1) and

fortified wine (good 2) are represented by the utility function U(x1,x2)=XjX28 (MUi=x2", and

MU2=8xıx27). Homer receives a pension of $100.00 per week. He can buy food at the local

dispensary at a price of $4 a bucket. The local convenience store sells fortified wine at $6 a gallon

jug.

What is Homer's MRS?

 In a given economy, consumption increases by $2.5 trillion following a $4 trillion increase in disposable income. What is the marginal propensity to save in that economy?

0.375

2.67

1.5

0.625

If 75% of any increase in income is spent on consumption, then an increase in autonomous investment of R1 billion results in an increase in national income of as much as

R5 billion

R1.33 billion

R4 billion

R6 billion