39 Multiple Choice 2 points Disposable Income Consumption \$ 230 \$ 207 255 227 280 247 305 267 330 287 Refer to the given data. At the \$230 level of disposable income, the average propensity to save is 0.125. the marginal propensity to save is 2.5 percent. dissaving is \$23. the average propensity to consume is 0.900.
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Saving is Disposable Income - Consumption = $230 - $207 = $23. Show more…
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Chapter Test Round-off your final answer to three decimal places. (You can use Excel or MS Word) 1. Given the household disposable income and consumption, determine whether net saving or dissaving occurs at each item. Item | Disposable Income | Consumption | Net Saving or Dissaving ---|---|---|--- A | 0 | 1000 | -1000 B | 1200 | 2750 | -1550 C | 4500 | 4500 | 0 D | 5000 | 4725 | 275 E | 6800 | 5850 | 950 2. Using the data in problem number 1 plot the consumption function. Indicate disposable income on the horizontal axis and consumption expenditure on the vertical axis. Determine the breakeven point. (Use scatter with smooth lines) 3. Using the same set of data presented in the problem number 1, compute the marginal propensity to consume (MPC) and marginal propensity to save (MPS). Indicate your answer on the same set of data in problem number 1 by adding two columns and labeling them with MPC and MPS, respectively. 4. Insert additional column on the table presented in problem number 1 and label as APC and APS. Calculate the average propensity to consume (APC) and average propensity to save (APS) and insert your answer to newly constructed column. 5. Based on the newly constructed table in problem number 4, briefly explain the relationship between MPC and MPS, and APC and APS.
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