Suppose that the marginal propensity to consume is (in billions of dollars), and that consumption is $5.33 billion when disposable income is 0. Find the national consumption function. If it's necessary, round your calculations to four decimal places.

Question

Suppose that the marginal propensity to consume is  (in billions of dollars), and that consumption is $5.33 billion when disposable income is 0. Find the national consumption function. If it's necessary, round your calculations to four decimal places. ​

Quizplus · Accepted Answer

The national consumption function is expressed as:
C = a + MPC x Yd
where C is consumption, MPC is the marginal propensity to consume, Yd is disposable income, and a is autonomous consumption (consumption that occurs regardless of income, such as basic needs).
We are given that MPC = 11eb0d3b_9892_c8ea_9790_bf6a481e26d6_TB1243_11 and C = $5.33 billion when Yd = 0.
Substituting these values into the equation, we have:
5.33 = a + 0.11 x 0
a = 5.33
Thus, the national consumption function is:
C = 5.33 + 0.11Yd
Rounding to four decimal places, this can be expressed as:
C = 11eb0d3b_9892_c8ee_9790_8fdc7d64a727_TB1243_11.

Suppose That the Marginal Propensity to Consume Is (In