1. Explain the difference between autonomous and induced expenditures. Give examples of each.
2. Suppose the following information describes a simple economy. Figures are in billions of dollars.
Disposable personal income Consumption
0 100
100 120
200 140
300 160
a. What is the marginal propensity to consume?
b. What is the marginal propensity to save?
c. Write an equation that describes consumption.