What are the marginal propensity to consume and level of autonomous consumption spending for a consumption function of the following form: C = 1,200 + 0.5DI?
a. The marginal propensity to consume is 0.5; autonomous consumption spending is $0.50.
b. The marginal propensity to consume is 0.5; autonomous consumption spending is $1,200.
c. The marginal propensity to consume is 1,200; autonomous consumption spending is $0.50.
d. The marginal propensity to consume is 1,200; autonomous consumption spending is $600.
e. There is insufficient information to answer this.
B
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Differentiate between a change in demand and a change in quantity demanded
What will be an ideal response?
The short-run elasticity of supply is less than the long-run elasticity of supply
A) because consumers' tastes and preferences change in the long run but not in the short run. B) because producers can adjust the amount of machinery in the long run but not in the short run. C) only for durable goods. D) only for non-durable goods.