1. Suppose that a rise in income from P60,000 to P70,000 leads to an increase in consumption from P47,000 to P54,000. a. Solve for the marginal propensity to consume (MPC) and marginal propensity to save (MPS). b. In a closed economy, what is the mathematical relationship between MPC and MPS? What explains this? C. What is the slope of the consumption function that can be derived from this? d. If consumption is P5,000 when income is zero, what is the consumption function derived from this?

1. Suppose that a rise in income from P60,000 to P70,000 leads to an increase in consumption from P47,000 to P54,000. a. Solve for the marginal propensity to consume (MPC) and marginal propensity to save (MPS). b. In a closed economy, what is the mathematical relationship between MPC and MPS? What explains this? C. What is the slope of the consumption function that can be derived from this? d. If consumption is P5,000 when income is zero, what is the consumption function derived from this?

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter9: Aggregate Demand

Section: Chapter Questions

Problem 1.3P

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