Yes, this encourages the buyer to pay more for an item especially if it is by a well known branded. This gives them to opportunity to brag and boast with their purchase. Also when the product is well known consumers are going to try their absolute best to buy it, this is going to make the product scare, hence increasing its price.
Answer:
(B) $20 billion
Explanation:
Given a certain level of MPC, an increase in government spending (G) by a certain amount translates to an increase in aggregate demand (AD) through the relationship below.
where Δ means <em>change.</em>
<em />
Therefore, given ΔAD of $50 billion, and MPC of 0.6,
= 
= 
= ΔG = 50 * 0.4 = 20
Therefore, increase in government purchases = $20 billion.
Answer:
Increase in savings resulting directly from the given change in income
= increase in income - increase in consumption = $2000-$150 = $500
Marginal propensity to save = increase in savings/increase in income = 500/2000 = 0.25
Explanation:
Answer:
$69,378.96
Explanation:
The first step is to determine the future value of Jill's balance
FV = P (1 + r)^n
FV = Future value
P = Present value
R = interest rate
N = number of years
$866,000(1.09)^8 = $1,725,559.25
the second step is to determine the future value of the balance in Bob's account
$482,000(1.09)^8 = $960,415.19
The difference between Jill and Bob's future value amount is 765,144.06. this has to be the future value of bob's yearly savings
yearly savings = 765,144.06. / annuity factor
Annuity factor = {[(1+r)^n] - 1} / r
(1.09^8 - 1) / 0.09 = 11.028474
765,144.06. / 11.028474 = $69,378.96
