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1a. Suppose that, if their income rises by $100, all households in Normalia raise their spending by $80.
The MPC in Normalia is:____.
MPS in Normalia is:____.
b. Suppose that the MPC in South Pangea is 0.6.
If a South Pangean household earns an extra $100, by how much will they increase their spending?
2. Suppose that the MPC in North Laurasia is .5.
a. What is the spending multiplier for the North Laurasian economy?
b. If the government spends an extra $1000, by how much with the economy grow?

Respuesta :

Answer:

0.2

0.8

40

2

2000

Explanation:

Marginal propensity to consume is the proportion of disposable income that is spent on consumption

Marginal propensity to consume = amount consumed / disposable income

Marginal propensity to save is the proportion of disposable income that is saved

Marginal propensity to save = amount saved / disposable income

MPC + MPS = 1

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