Suppose that when Sue’s disposable income is $10,000, she spends $8,000, and when her disposable income is $20,000, she spends $
1 answer:
Answer:
The correct answer is: 2,000; 0.4
Explanation:
We can write the initial consumption function as,
C = a + bY
8,000 = a + 10,000b
a = 8,000 - 10,000b
The new consumption function is,
14,000 = a + 20,000b
Putting value of a in this function
14,000 = 8,000 - 10,000b + 20,000b
14,000 - 8,000 = 10,000b
b =
b = 0.6
Putting the value of b in the initial function,
8,000 = a + 10,000 0.6
a = 8,000 - 6,000
a = $2,000
The marginal propensity to consume or b is 0.6.
The marginal propensity to save will be
= 1 - 0.6
= 0.4
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The amount of cash that should be reported in the company's balance sheet as of May 31 is $2,975.
<h3>What is a balance sheet?</h3>
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Deposits outstanding = $3,050 (+)
actual amount on check my Money corporation = $95 (+)
Service fees = $170 (-)
∴
So, the amount of cash that should be reported in the company's balance sheet as of May 31 is $2,975.
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