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Unit (5).docx - Chapter 9 Steven Saint 1 Consumption...

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Chapter 9 Steven Saint

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1. 140 160 180 200 220 240 260 280 300 320 0 50 100 150 200 250 300 350 400 450 Consumption function(in billions) Y-Values Figure 1 Consumption spending on vertical and Expenditure on horizontal.
B. There is an increase of \$50 billion for every \$100. A slope is rise over run (50/100). This will give you a .5 slope. 4. A) An increase in the net taxes will have a negative impact with high taxes and low consumption. B) An increase in the interest rate will have a negative impact causing low consumption. C) An increase in in consumer optimism/confidence will have a positive impact causing high consumption. D) An increase in the price level will have a negative impact causing low consumption. E) An increase in net wealth will have a positive impact causing high consumption. F) “A change in in disposable income, other things constant, means a movement along a given consumption function, not a shift of that function” ( McEachern, 2015, p. 143). 9. A) Multiplier=10, GDP changes=\$100b B) Multiplier=4,GDP changes= \$40b C) Multiplier=2.5,GDP changes=\$25b Chapter 10 3. A) 14.2/130

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• Spring '11
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