q7 and q 12 164 PART III The Core of Macroeconomic Theory12. Use the graph to answer the questions that follow.a. What is the value of the MPCb. What is the value of the MPSc. What is the value of the multiplier?d. What is the amount of unplanned investment at aggregateoutput of 300, 900, and 1,300?45° lineAE = C+I13. According to the Bureau of Economic Analysis, during therecession of 2007–2009, household saving as a fraction of dis-posable personal income increased from a low of just over1 percent in the first quarter of 2008 to 5 percent in the secondquarter of 2009. All else equal, what impact would this changein saving have on the MPC, MPS, and multiplier? How wouldthis change affect equilibrium output when planned invest-ment changes?120045014. Assume in a simple economy that the level of saving is-500 whenaggregate output equals zero and that the marginal propensity tosave is 0.2. Derive the saving function and the consumption func-tion, and draw a graph showing these functions. At what level ofaggregate output does the consumption curve eross the 45° line?Explain your answer and show this on the graph.3009001,300A ndino rassyPlanned aggregate expenditure, AE 7. The consumer price index (CPI) is a fixed-weight index. It com-pares the price of a fixed bundle of goods in one year with theprice of the same bundle of goods in some base year. Calculatethe price of a bundle containing 100 units of good X, 150 unitsof good Y, and 25 units of good Z in 2008, 2009, and 2010.Convert the results into an index by dividing each bundle pricefigure by the bundle price in 2008. Caleulate the percentagechange in your index between 2008 and 2009 and again between2009 and 2010. Was there inflation between 2009 and 2010?2008PRICES2010PRICES2009QUANTITYCONSUMEDGOODPRICES100S1.0051.50S1.751501.502.002.00253.003.253.00

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12. Use the graph to answer the questions that follow. a. What is the value of the MPC? b. What is the value of the MPS? c. What is the value of the multiplier? d. What is the amount of unplanned investment at aggregate output of 300, 900, and 1,300? 45° line AE = C+I

12. Use the graph to answer the questions that follow. a. What is the value of the MPC? b. What is the value of the MPS? c. What is the value of the multiplier? d. What is the amount of unplanned investment at aggregate output of 300, 900, and 1,300? 45° line AE = C+I

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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