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Autonomous and induced expenditures

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1. Explain the difference between autonomous and induced expenditures. Give examples of each.

2. Suppose the following information describes a simple economy. Figures are in billions of dollars.

Disposable personal income Consumption

0 100

100 120

200 140

300 160 

a. What is the marginal propensity to consume?

b. What is the marginal propensity to save?

c. Write an equation that describes consumption.

Reference no: EM131474946

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