Figure 3-1

-Employing Figure 3-1 above,autonomous consumption expenditures are ________,and the marginal propensity to consume is ________.

Question

Figure 3-1
 
-Employing Figure 3-1 above,autonomous consumption expenditures are ________,and the marginal propensity to consume is ________.

Quizplus · Accepted Answer

The autonomous consumption expenditures are shown as the intercept of the consumption function and are equal to $200 billion. The marginal propensity to consume is the slope of the consumption function, which is the change in consumption divided by the change in income. From the graph, we can see that the change in consumption is $300 billion (from $200 billion to $500 billion) and the change in income is $500 billion (from $0 to $500 billion). Therefore, the marginal propensity to consume is 0.6 (i.e. $300 billion/$500 billion).

Figure 3-1 -Employing Figure 3-1 Above,autonomous Consumption Expenditures Are ________,And the Marginal