Reference no: EM132294135

Table 1

Disposable Income Saving

0 -5

10 -3

20 -1

30 1

40 3

50 5

Table 1 shows disposable income and saving in an economy. Use table 1 to answer Problems 1 and 2

1. Calculate consumption expenditure at each level of disposable income. Over what range of disposable income is there dissaving? Estimate the level of disposable income at which saving is zero.
2. Calculate the marginal propensity to consume. If wealth increases by $10 trillion, in which direction will the consumption function change