DI=Y OUTPUT/INCOME CONSUMPTION(C) SAVINGS (S) MPC MPS APC APS 0 80 ______ ____ _____ _____ _____ 100 140 _______ _____ _____ _____ __ ____ 200 200 _______ _____ _____ _____ _____ 300 260 _______ _____ ______ ______ _____ 400 320 _______ ______ ______ ______ ______ a. Complete the following chart above b. Show graphically ( what is the equilibrium level of output)? c. Assume the following general forms of a Consumption & Savings equations C=a +bY S= -a + (1-b)Y where: a = Vertical intercept ie. The value of C when Y=0 b=MPC (1-b) = MPS Y= Output/Income
DI=Y
OUTPUT/INCOME CONSUMPTION(C) SAVINGS (S) MPC MPS APC APS
0 80 ______ ____ _____ _____ _____
100 140 _______ _____ _____ _____ __ ____
200 200 _______ _____ _____ _____ _____
300 260 _______ _____ ______ ______ _____
400 320 _______ ______ ______ ______ ______
a. Complete the following chart above
b. Show graphically ( what is the equilibrium level of output)?
c. Assume the following general forms of a Consumption & Savings equations C=a +bY
S= -a + (1-b)Y where:
a = Vertical intercept ie. The value of C when Y=0
b=MPC
(1-b) = MPS
Y= Output/Income
d. Using the data above write the Consumption and Savings equations (example C=30 + .8Y S=-30 +.2Y)
e. Assume Y= 400 Calculate the level of Consumption Hint: plug in 400 for Y into the Consumption and Savings equations
f. Also, calculate the following APC (C/Y); APS (S/Y)
g. Calculate the Multiplier 1/(1-MPC)
h. Assume Y= C + I + G + X I=20; G=30 X=0 Use the equation derived in (d) above; use this to Plug in the value of C into the equation.
I=Busines Investments
G= Government Spending
X=Net exports.
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