Economics 12th Edition by William Baumol, Alan S Blinder

Exercise 18

(More difficult) Between 2008 and 2009, real disposable income (in 2005 dollars) barely increased at all, owing to a recession. (It rose from $10,043 billion to $10,100 billion.) Use the data on real consumption expenditures given on the inside back cover of this book to compare the change in C to this $57 billion change in DI. Explain why dividing the two does not give a good estimate of the marginal propensity to consume.