1. Interpret what it means if MPC equals 0.95? 2. If your MPC is 0.9 and your income falls by $200, what will be your change in spending? 3. For each of the following determine whether there is...

1.             Interpret what it means if MPC equals 0.95?

2.             If your MPC is 0.9 and your income falls by $200, what will be your change in spending?

3.             For each of the following determine whether there is movement along a consumption schedule (function), or a shift of the schedule.  If there is a shift then indicate  the direction of the shift and interpret that shift.

                   a.      Consumer’s expectations became more optimistic.

                    b.     An increase in the interest rate.

                    c.     There is a current low level of consumer durables on hand.

                    d.     Consumer incomes rise.