Assume there are 400 families in a community. Each of these families spends exac

Question

Assume there are 400 families in a community. Each of these families spends exactly $100 plus one-half of its total income each week on consumption. Half of the 400 families are considered poor

Explanation / Answer

1>.the consumption of each poor family prior to tax 100+200/2=$200 so for all the poor family consumption= 200*(100+200/2)=$40,000. per week. b>.the consumption of all the each rich family is 100+400/2=$300.so for all rich family c=200*300=$60000 2>.the consumption after tax for poor family and reach family will be same which is equal to 100+300/3= 250$ 3>, no our proposal do not increases total consumption spending. because mpcis 1/2 4>.if the marginal propensity to consume would have been more y=than half the this will be posiible ...............5> the other policy may include by increasing the government spending or investment their income can be increased and so thir total consumption would also increase.

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.