Compute average propensity to consume also marginal propensity to consume.
1. Illustrate what is the marginal propensity to consume also elucidate why is always less than one?
2. Suppose which Graeme had $200,000 of disposable income also spent $180,000 on consumption in 2006 also had $300,000 of disposable income also spent $240,000 on consumption in 2007.
I. Illustrate what was Graeme's average propensity to consume in 2006?
II. Illustrate what was Graeme's average propensity to consume in 2007?
III. Illustrate what is Graeme's marginal propensity to consume?
IV. If Graeme's income increase to $400,000 in 2008, describe how much would he be likely to spend on consumption which yr? Illustrate what would be his average propensity to consume?
V. If Graeme's income decrease to $100,000 in 2008, describe how much would he be likely to spend on consumption which yr? Illustrate what would be his average propensity to consume?