Macroeconomics + Economy 2009 Update 18th Edition by Campbell McConnell, Sean Masaki Flynn,Stanley Brue

Exercise 15

ADVANCED ANALYSIS Suppose that the linear equation for consumption in a hypothetical economy is C = 40 +.8 Y. Also suppose that income ( Y ) is $400. Determine ( a ) the marginal propensity to consume, ( b ) the marginal propensity to save, ( c ) the level of consumption, ( d ) the average propensity to consume, ( e ) the level of saving, and ( f ) the average propensity to save.