The Following Table Shows the Relationship Between Income and Consumption

question 116

Essay

The following table shows the relationship between income and consumption in an economy.

Assume that investment (I) is $5 billion, government purchases (G) are $4 billion, and net exports (X) are $1 billion.

(A)What is the numerical value of the marginal propensity to consume?

(B)Construct a table that is analogous to the one presented in the text for this economy. What is the level of income at the point of spending balance?

(C)For this level of income, calculate national saving. Is national saving equal to investment plus net exports?

(D)Suppose the above problem is modified to include taxes. Suppose first that, at any level of income, consumers must pay taxes equal to $3 billion. Find the new level of spending balance by modifying the table. Hint: If consumers have to pay taxes, this is income that they cannot use for consumption. Verify again that national saving is equal to investment plus net exports. Find private and government saving.

(E)Graphically illustrate what happens to spending balance when the government increases taxes by $3 million.

Identify key personality traits that influence relationship dynamics and outcomes.

Recognize the role of attachment theory in explaining relationship behaviors and expectations.

Analyze the impact of dispositional contempt and rejection sensitivity on relationships.

Comprehend the predictors of relationship satisfaction and deal-breakers in partnerships.

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Definitions:

Serous Membrane

A serous membrane is a thin layer of tissue that lines certain internal cavities of the body, secreting a serous fluid that lubricates and reduces friction between organs.

Serous Fluid

A clear, thin fluid that lubricates the surfaces between two membranes, reducing friction from muscle movement.

Reduce Friction

A method or process of decreasing resistance between two objects or surfaces in contact, often to improve efficiency or prevent wear.

Perpendicular Orientation

A position or alignment where two lines or planes meet at a right angle or 90 degrees to each other.