The marginal propensity to consume is given by the change in consumption divided
ID: 1208341 • Letter: T
Question
The marginal propensity to consume is given by
the change in consumption divided by the change in saving.
the change in consumption divided by the change in disposable personal income.
consumption divided by the change in disposable personal income.
consumption divided by disposable income.
All other things unchanged, a recession in Japan
increases U.S. net exports and shifts the U.S. aggregate demand curve to the right.
decreases U.S. net exports and shifts the U.S. aggregate demand curve to the right.
increases U.S. net exports and shifts the U.S. aggregate demand curve to the left.
decreases U.S. net exports and shifts the U.S. aggregate demand curve to the left.
the change in consumption divided by the change in saving.
the change in consumption divided by the change in disposable personal income.
consumption divided by the change in disposable personal income.
consumption divided by disposable income.
Explanation / Answer
1. the change in consumption divided by the change in disposable personal income.
Marginal propensity to consume shows how much consumption of a person change when his income changes. It shows change in consumption due to change in income.
2. decreases U.S. net exports and shifts the U.S. aggregate demand curve to the left.
Recession in Japan leads to less imports by Japan from other countries. When Japan reduces its imports from the U.S then exports of US decreases and aggregate demand of US products decreases which lead to leftward shift of aggregate demand curve.
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