In a closed economy with no government, the level of consumption spending is determined by the equation $$$\mathrm{C}=\mathrm{a}+\mathrm{bY}$$$. What does $$$b$$$ represent in this equation?

Economics

IGCSE&ALevel

CAIE

Exam No：9708_s25_qp_34 Year：2025 Question No：13

Answer:

9.1.1.1 definition of the multiplier

9.1.1.2 formulae for and calculation of multiplier in a closed and open economy, with and without a government sector

9.1.1.3.1 average and marginal propensities to save (aps and mps)

9.1.1.3.2 average and marginal propensities to consume (apc and mpc)

9.1.1.3.3 average and marginal propensities to import (apm and mpm)

9.1.1.3.4 average and marginal rates of tax (art and mrt)

9.1.1.4 national income determination using AD and income approach with the multiplier process

9.1.1.5 calculation of effect of changing AD on national income using the multiplier

9.1.2.1 consumption function: autonomous and induced consumer expenditure

9.1.2.2 savings function: autonomous and induced savings

9.1.2.3 autonomous and induced investment; the accelerator

9.1.2.4 government spending

9.1.2.5 net exports (exports minus imports)

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