Use the following to answer question 3 Figure: Mac Aggregate roeconomies Equilib
ID: 1109285 • Letter: U
Question
Use the following to answer question 3 Figure: Mac Aggregate roeconomies Equilibrium price level Real GDP 3. (Figure: Macroeconomic Equilibrium) Refer to the figure Macroeconomics Equilibrium. Curve 1 refers toc A) short-run aggregate supply; long-run aggregate supply; aggregate demand B) long-run aggregate supply; short-run aggregate supply; aggregate demand C) aggregate demand; short-run aggregate supply; long-run aggregate supply D) aggregate demand; long-run aggregate supply; short-run aggregate supply , curve 2 refers to , and curve 3 refers to Use the following to answer question 4: Table: Individual and Aggregate Consumption Funetions Disposable Consumer Spending $150 Current Ineome Andy Fred Mark $100 $200 SO 1,000 950 800 1100 4. (Table: Individual and Aggregate Consumption Functions) According to the table Individual and Aggregate Consumption Functions, which represents Mark's individual consumption function? A) C=0.8YD. B) C 200+1.1YD C) C 450+0.5YD D) C-200+0.9YDExplanation / Answer
3.
The long-run aggregate supply curve is a vertical line and the short-run aggregate supply curve is positively sloped while the Aggregate demand curve is negatively sloped.
Hence curve 1 is Aggregate demand curve.
Curve 2 is The long-run aggregate supply curve.
Curve 3 is The short-run aggregate supply curve.
Therefore option D is the correct answer.
4.
When Mark's disposable income is 0.
Mark's Consumption is =200
=200
Autonomous consumption = 200
When Mark's disposable income is 1,000.
Mark's Consumption is =1,100
=1,100
Marginal propensity to consume (MPC) = change in consumption / change in the income
= (1100-200)/ (1,000 -0)
=900/ 1000
= 0.9
Hence Mark's consumption funtion;
C= a + MPC YD
C= 200 + 0.9 YD
Hence option D is the correct answer.
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