that your household’s marginal propensity to consume (MPC) is 0.60.
What does this say about your household’s consumption and savings
behaviour?
b) Explain the differences in the MPC across income groups.
c) Illustrate diagrammatically the consumption function for your
home country.
d) The following diagram shows the relationship between consumer
confidence and consumption in the United States after the Global
Financial Crisis (GFC) that began in 2008. What happened to
consumer confidence during the Global Financial Crisis (GFC) in the
United States? Explain the main reason households lose confidence
(when there is an economic downturn).
- A Think About Your Household In Your Home Country Let S Assume That Your Household S Marginal Propensity To Consume M 1 (244.36 KiB) Viewed 42 times
income impacts on what variable in our model? Illustrate
diagrammatically the impact on consumption arising from the decline
in consumer confidence due to the GFC.
110 105 Real disposable income Real consumption of non-durable goods Consumer sentiment index Real consumption of durable goods 100 95 Index (2008 Q1 = 100) 90 85 80 75 2008 Q1 2008 Q3 2009 Q1 2009 Q3