ich of the following components of consumption spending typically sees the largest decline in demand during a recession? automobiles food clothing housing
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Q. Q1.
Which of the following components of consumption spending typically sees the largest decline in demand during a recession?
- automobiles
- food
- clothing
- housing
.
Step by step
Solved in 2 steps
- Consider the graph below: Planned Aggregate Expenditure (PAE, billions of $) 1000 900 800 700 600 500 400 300 200 100 0 100 200 300 400 500 600 700 800 1 PAE 2 PAE Y PAE₁ 900 1000 Actual Aggregate Expenditure (Output or GDP, billions of $) a. What is the expenditure multiplier in this economy? b. What is the marginal propensity to consume in this economy?Explain the basic idea of the expenditure multiplier and the role consumers' play.Question 3 of 16 Income and consumption changes for five people are shown in the table. Given this information, rank the marginal propensities to consume (MPC) for the five people from largest to smallest. Largest MPC Smallest MPC Answer Bank Bert Doug Eli Carter Al Name Income change Consumption change Al +$5,000+$5,000 +$3,000+$3,000 Bert +$2,500+$2,500 +$800+$800 Carter +$1,000+$1,000 +$800+$800 Doug −$2,500−$2,500 −$1,750−$1,750 Eli −$5,000−$5,000 −$2,000−$2,000
- What is this household's marginal propensity to consume at c1 (in percent)?Monica's current income went up from $100.000 to $105,000 and she increased her current consumption by $2100. What is her marginal propensity to consume?If autonomous consumption increases by $50. What is the multiplier? What is the change in totalspending? Use a diagram to show which curve shifts and how.
- The table below provides Income and consumption Data in billions of dollars. Answer question below based on it.Disposable Consumption SavingsIncome100 80 --------200 150 --------- Using information from question 21, calculate the marginal propensity to consume for the economy?The multiplier process can occur when a decrease in investment spending… a) Increases household saving, causing consumers to buy more goods and services.b) Reduces household incomes, causing consumers to buy fewer goods and services.c) Increases household incomes, causing consumers to buy fewer goods and services.d) Reduces household incomes, causing consumers to buy more goods and services18. What will be the level of consumption spending at an income level of 36? a) 30 b) 24 c) 28 d) 16 e) 8
- Which of the following would be most likely to increase consumption spending? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a A reduction in consumer credit card debt b A drop in stock prices A higher interest rate d The expectation of lower future pricesMacmillan Learning (Table: Consumption and Savings) Based on the table, the marginal propensity to consume is propensity to consume Income Consumption Spending Saving $30,000 $30,000 $0 40,000 35,000 5,000 50,000 40,000 10,000 0.5; varies with the level of income $5,000; is $5,000 $10,000; is $35,000 2; varies with the level of income and the averageIn each of the following cases, calculate the values of MPC, MPW, and the spending multiplier. Enter your responses below rounded to 2 cecimal places. a. A $6 million increase in income leads to a $900,000 rise in consumption on domestic items. MPC is therefore and the spending multiplier is , MPW is b. A $8 million decrease in income results in a $0.8 million drop in consumption on domestic items. MPC is therefore and the spending multiplier is |. MPW is c. A $4 million decrease in income causes a $3.2 milion drop in withdrawals. MPC is therefore 1. MPW is and the spending multiplier is
