Changes in disposable income

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Q1. If consumption increases by $12 billion when real disposable income increases by $15 billion, what is the value of the MPC? What is the relationship between the MPC and the MPS? If the MPC increases, what must happen to the MPS? How is the MPC related to the consumption function? How is the MPS related to the saving function?

Q2. How do changes in disposable income affect government purchases and the government purchase function? How do changes in net taxes affect the consumption function?

Reference no: EM135690

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