A simple closed economy with no government has autonomous consumption expenditures of ​$80 million and a marginal propensity to consume of 0.60

Question

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The level of consumption if income is ​$150 million is ​$---200, 170, or
215 million.

Answer 1

To calculate the level of consumption when income is $150 million, we need to use the equation:

Consumption = Autonomous Consumption + (Marginal Propensity to Consume x Income)

Given that the autonomous consumption expenditures are $80 million and the marginal propensity to consume is 0.60, we can substitute these values into the equation:

Consumption = $80 million + (0.60 x $150 million)
Consumption = $80 million + $90 million
Consumption = $170 million

Therefore, the level of consumption when income is $150 million is $170 million.

Answer 2

b. The level of consumption when income is ​$225 billion is ​$---million

Answer 3

Using the same equation as before:

Consumption = Autonomous Consumption + (Marginal Propensity to Consume x Income)

We substitute the given values:

Consumption = $80 million + (0.60 x $225 billion)

However, we have to convert the income from billions to millions:

$225 billion = $225,000 million

Now we can calculate:

Consumption = $80 million + (0.60 x $225,000 million)
Consumption = $80 million + $135,000 million
Consumption = $135,080 million

Therefore, the level of consumption when income is $225 billion is $135,080 million.

Answer 4

no the answer is 215M-->80+(.6*225)=215M. Ifollow the steps you show me eaier

Answer 5

Apologies for the mistake in my previous response. You are correct.

Using the correct equation:

Consumption = Autonomous Consumption + (Marginal Propensity to Consume x Income)

Substituting the given values:

Consumption = $80 million + (0.60 x $225 million)

Calculating:

Consumption = $80 million + $135 million
Consumption = $215 million

Therefore, the level of consumption when income is $225 million is $215 million.