equations

Question 1

The relationship between the marginal propensity to consume (the share of their income a person decides to spend) and the marginal propensity to save (the share one decides to save)

Answer 1

MPC + MPS = 1

Question 2

Consumption as a function

Answer 2

C = (MPC · income) + base consumption

Question 3

Consumption after taxes function

Answer 3

C = (MPC · (income - taxes)) + base consumption

Question 4

Taxes as a function

Answer 4

T = tax rate · income

Question 5

Imports as a function

Answer 5

M = MPI · income

Question 6

Aggregate expenditure/income/GDP as a function

Answer 6

Y = C + G + I + (X - M)
Y = MPC(Y - (tax rate · Y)) + G + I + X - (MPI · Y)

Question 7

Expenditure/spending multiplier

Answer 7

Multiplier = 1/(1 - (MPC · (1 - tax rate) + MPI))