Assume there are 400 families in a community. Each of these families spends exactly $100 plus one-half of its total income each week on consumption.

Assume there are 400 families in a community. Each of these families spends exactly $100 plus one-half of its total income each week on consumption. Half of the 400 families are considered poor—they each receive incomes of $200/week. The other half of the families are considered rich—they each receive incomes of $400/week.You want to increase total consumption in the community and propose to achieve this goal by taxing the rich families by $100/week and distributing the tax proceeds to the poor families to spend. As a result, each family in the community would have a net weekly income of $300.1. Based on the assumption that each family spends $100 plus one-half of its total income each week, what is the total weekly consumption spending of a poor family prior to instituting the tax? What is the total weekly consumption spending of a rich family prior to instituting the tax?2. Again, following the assumption that each family spends $100 plus one-half of its total income each week, what is the total weekly consumption spending of a poor family after implementing your tax plan? What is the total weekly consumption spending of a rich family after implementing your tax plan?3. Thinking in terms of the marginal propensity to consume concept, would your proposal increase total consumption spending?

Assume there are 400 families in a community. Each of these families spends exactly $100 plus onehalf of its total income each week on consumption. Half of the 400 families are considered...