Suppose that the marginal propensity to consume is (in billions of dollars) and that consumption is $4.75 billion when disposable income is 0. Find the national consumption function C. If it's necessary, round your calculations to two decimal places.

Question

Suppose that the marginal propensity to consume is  (in billions of dollars) and that consumption is $4.75 billion when disposable income is 0. Find the national consumption function C. If it's necessary, round your calculations to two decimal places.

Quizplus · Accepted Answer

The national consumption function C can be represented as C = a + bYd, where a is the autonomous consumption (consumption when Yd = 0), b is the marginal propensity to consume, and Yd is disposable income.

From the given information, a = 4.75 billion and b = 0.11 (11ea984b_b197_18a7_9029_2935e4d68400_TB4005_11 in decimal form)

Therefore, the national consumption function C can be written as:

C = 4.75 + 0.11Yd

Which simplifies to:

C = 11ea984b_b197_3fb9_9029_1fd244c8b8b2_TB4005_11

Therefore, the best choice is B, 11ea984b_b197_3fb9_9029_1fd244c8b8b2_TB4005_11.

Suppose That the Marginal Propensity to Consume Is (In