Aggregate consumption varies less than aggregate investment. Briefly explain why this is true assuming that consumption and investment decisions are taken by rational and forward-looking agents.
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Aggregate consumption varies less than aggregate investment. Briefly explain why this is true assuming that consumption and investment decisions are taken by rational and forward-looking agents.
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- Explain the determinants of investment. Include in your answer an explanation of how a change in each determinant affects investment.Aggregate consumption varies less than GDP and aggregate investment varies more. Can you reconcile these observations with assumption that consumption and investment decisions are taken by rational forward-looking agents?Complete the following table. Given Disposable Income and an MPC, calculate the level of consumption and savings.
- Clearly explain the characteristics of the consumption function.Construct a consumption function from the data given here and determine the MPC. Given the consumption function in the above question, what is the relationship between disposable income and consumption? Is it direct or indirect and then explain what it means.The table below shows aggregate expenditure in the short-run, answer the following questions in the spaces provided below Aggregate output (Y) C I G Aggregate Expenditure AE 0 20 30 10 100 100 30 10 200 180 30 10 300 260 30 10 400 340 30 10 500 420 30 10 600 500 30 10 700 580 30 10 1 What is the value of MPC 2 What is the value of MPS 3 What is the value of autonomous consumption (Ca) 4 Write the consumption function 5 What is the amount of equilibrium consumption 6 What is the amount of saving when Y = 200 7 What is the amount of autonomous expenditure 8 What is the amount of equilibrium expenditure 9 What is the size of expenditure Multiplier 10 What is the value of unplanned inventory when Y = 350
- The life cycle model of consumption argues that people consume and save in different proportions as they age. Seniors tend to consume more than save as their lives adjust to the realities of old age. Assuming the hypothesis is true, how would the aging of the very large baby boomer generation affect consumption and income?The accompanying graph represents the aggregate consumption function for the small island nation of Pineapple Paradise. The people of Pineapple Paradise expect their future disposable income to increase. Use the graph to show an increase in consumption expenditures. What is the new level of aggregate autonomous consumer spending? 1 $1000 2 $3000 3 $2000 4 $4000Is the following statement TRUE or FALSE? Please provide reason for the answer. The positive relationship between consumption expenditure and disposable income can be shown by a positive slope of consumption curve
- Indicate whether each of the following descriptions represents saving or investment, as defined by a macroeconomist. Saving Investment Description This occurs when a person or firm purchases new capital. This occurs when a person's income exceeds his consumption. Which of the following situations represent investment? Check all that apply. You use your $200 paycheck to buy stock in AT&T. Your family takes out a mortgage and buys a new house. You borrow $1,000 from a bank to buy a car to use in your pizza delivery business. Your roommate earns $100 and deposits it in his account at a bank.Please write down whether the following statements are true or false, and explain your answer very briefly A)If actual investment is greater than planned investment, inventories increase more than planned. B)The marginal propensity to consume is the change in consumption expenditure divided by the percentage change in income. C)Gross domestic product (GDP) is the value of all goods and services produced in an economy over a particular time period. D)Monetary policy refers to taxation and spending policies implemented by government. E)In a simple Keynesian model (with lump-sum taxes and a MPC of 0.8), a tax cut of 20 billion TL will have less of an impact on GDP than an increase in government spending of 10 billion TL. D)When you take 1000 TL from your savings account and deposit it in your checking account, M2 decreases. F)An open market purchase of government securities (such as Treasury Bills) by the Central Bank will decrease the money supply and raise the interest rate.…Study the scenario and complete the question(s) that follow(s): Silesia You are provided with the following information about an imaginary economy called Silesia. Use the information provided in the table to answer the questions below. Government expenditure 400 Exports 250 Autonomous imports 50 Autonomous consumption 150 Investment Expenditure 300 Full-employment output 2040 Marginal propensity to consume 0.75 Marginal propensity to import 0.15 Таx rate 0.25 5.1 Derive and calculate the consumption function for the data provided. Show all formulas and calculations used. 5.2 Calculate autonomous spending. Show all formulas and calculations used. 5.3 Calculate the multiplier. Show all formulas and calculations used. Round off your final answer to 1 decimal. 5.4 Calculate the equilibrium level of income, using the values calculated in 5.2 and 5.3 above. Show all formulas and calculations used. 5.5 Calculate the government surplus or deficit at the equilibrium level of income. Show all…