Question

suppose the mpc in an economy is 0.95. the apc is initially 0.55 and disposable income is $6 billion. if disposable income increases to $18 billion, what is the new level of saving?

Answer 1

The new level of saving is 12.8 billion for the mpc economy.

Setting a baseline consumption rate will be the first step. By dividing consumption by income, which results in 0.9 = C / 4 billion and a consumption value of 3.8 billion for an income of 4 billion, you can get the average inclination to consume.

Calculate the change in consumption, on the other hand. The marginal propensity to spend is determined by dividing the change in consumption by the change in income, keep that in mind. You obtain 0.9 = C/10bn as a result, changing your income by 9bn. Consumption rises by 9 billion as a result, reaching a new record of 9 plus 3.8 billion, or 12.8 billion.

Learn more about income at

brainly.com/question/16055983?referrer=searchResults

#SPJ4