Answer To Question #241820 In Macroeconomics For Mercy

107 804 Assignments Done 100% Successfully DoneIn November 2024 Your physics assignments can be a real challenge, and the due date can be really close — feel free to use our assistance and get the desired result. Physics Be sure that math assignments completed by our experts will be error-free and done according to your instructions specified in the submitted order form. Math Our experts will gladly share their knowledge and help you with programming projects. Keep up with the world’s newest programming trends. Programming Answer to Question #241820 in Macroeconomics for Mercy 2021-09-24T10:21:45-04:00 Answers>Economics>Macroeconomics Question #241820 Based on our understanding of the Aggregate Expenditure (AE) Model (AE), we know that an increase in c1 (where C = c0 + c1Yd) will cause the AE function to become: Group of answer choices Flatter and a given change in autonomous consumption (c0) to have a larger effect on output. Steeper and a given change in autonomous consumption (c0) to have a smaller effect on output. Flatter and a given change in autonomous consumption (c0) to have a smaller effect on output. Steeper and a given change in autonomous consumption (c0) to have a larger effect on output. 1 Expert's answer 2021-09-24T11:29:12-0400

Y = c0 + c1Yd + I + G

c1 = marginal propensity to consume. It captures by how much households increase their consumption if their disposable income increases marginally. It is the slope coefficient and its value can vary from 0 < c1 < 1 .

Y = c0 + c1(Y − T) + I + G

Y = 1/1−c1 [c0 + I + G − c1T]

1/(1-c1) is the multiplier. So as the value of c1 increases, it will result in the increasing the value of multiplier and therefore the output Y will have a larger effect. Being the slope coefficient, increase in value of c1  will lead to a steeper shape of the curve.

Hence, the answer is Option D: Steeper and a given change in autonomous consumption (c0) to have a larger effect on output.

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Comments

Mercy 24.09.21, 18:36

Thank you so much now it starts to make sense

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