The following table shows the relationship between national income and consumption in an economy. National Income ($ Billions) Consumption ($ Billions) 0 5 10 11 20 17 30 23 40 29 50 35 60 41 47 53 59 65 Assume that investment (I) is $5 billion, government spending (G) is $4 billion, and net exports (NX) are $2 billion. Use the table above to calculate the marginal propensity to consume for this economy. 1. Find the level of income at the equilibrium point. 0.7 0.5 0.4 0.6
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Step 1: Calculate the change in consumption and national income from one level to the next level in the table. Show more…
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