Macroeconomics 13th Edition by William Baumol ,Alan Blinder

Exercise 5

(More difficult) Between 2008 and 2009, real disposable income (in 2009 dollars) declined slightly (by $51 billion), owing to a recession. Use the data on real consumption expenditures given on the inside back cover of this book to compare the change in C to this $51 billion decline in DI. Explain why dividing the two does not give a good estimate of the marginal propensity to consume.