Learn the toughest concepts covered in your Macroeconomics class with step-by-step video tutorials and practice problems.

Income and Consumption

1

Average Propensity to Consume and Save

1m

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2

Problem

If the Keynesian consumption function is C = 10 + 0.8 Yd then, when disposable income is $1000, what is the average propensity to consume?

A

$0.8

B

$800

C

$810

D

$0.81

E

Cannot be determined

3

Problem

If the Keynesian consumption function is C = 10 + 0.8 Yd then, when disposable income is $1000, what is the marginal propensity to save?

A

0.8

B

0.81

C

0.19

D

0.2

E

Cannot be determined