Consider the following multiplier model diagram:
For each of the following,draw a picture to show what would happen to the equilibrium level of income in the economy.
(a)Consumer sentiment about the future improves resulting in an increase in autonomous consumption of 100.
(b)Foreign economic activity rises,which results in an increase in autonomous exports of 100.
(c)Because the average life span increases,many people are saving more of their income than ever before.Consequently the mpe falls from 0.75 to 0.66.

Question

Consider the following multiplier model diagram:
  For each of the following,draw a picture to show what would happen to the equilibrium level of income in the economy.
(a)Consumer sentiment about the future improves resulting in an increase in autonomous consumption of 100.
(b)Foreign economic activity rises,which results in an increase in autonomous exports of 100.
(c)Because the average life span increases,many people are saving more of their income than ever before.Consequently the mpe falls from 0.75 to 0.66.

Quizplus · Accepted Answer

The Answer of Consider the following multiplier model diagram:
  For each of the following,draw a picture to show what would happen to the equilibrium level of income in the economy.
(a)Consumer sentiment about the future improves resulting in an increase in autonomous consumption of 100.
(b)Foreign economic activity rises,which results in an increase in autonomous exports of 100.
(c)Because the average life span increases,many people are saving more of their income than ever before.Consequently the mpe falls from 0.75 to 0.66.

Consider the Following Multiplier Model Diagram