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Value of the marginal propensity to consume

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Reference no: EM13848846

Consider a consumption function given by the following equation:

C = 1000 + 0.5YD

a) What is the value of the marginal propensity to consume?

b) Assume that investment and government spending are exogenous. What is the value of the multiplier in this economy and how do you calculate this value based on the consumption function above?

c) What is the value of the marginal propensity to save in this economy? Explain your answer.

d) What are the values of i) autonomous consumption and ii) autonomous savings in this model? Explain your answer.

Reference no: EM13848846

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