part e please The consumption and saving functions in the Keynesian modelSuppose we observe that a person's disposable income (DI) is 50,000 in 2019 and 63,000 in 2020. Suppose weobserve that this person's consumption (C) is 47,000 in 2019 and 58,700 in 2020. Assume that this person'sconsumption obeys the Keynesian consumption function, so that C = A + MPC*DI. Finally, assume that A and MPC areunchanged between 2019 and 2020.(a) Calculate the values of A and MPC for this consumer, and graph the consumption function. (Hint: subtract the Cfunction in 2019 from the C function of 2020).(b) In general, saving is given by the formula S = DI - C. Calculate this person's saving in 2019 and 2020. Assuming thatthis person's wealth (net worth) on January 1, 2019 was 80,000, what is their wealth on January 1, 2020? on January 1,2021?(c) In general, if consumption is given by the function C = A + MPC*DI, then saving will obey the saving function S = -A+ (1 - MPC)*DI. Plot the saving function graphically for the consumer in this problem (using the values you found inpart (a)). What is this consumer's marginal propensity to save?(d) Calculate the level of disposable income such that saving is exactly zero for this person. If disposable income is lessthan this level, what happens to saving? Explain how a person can have negative saving, and give two examples of howa person can finance negative saving.(e) Suppose that this person earns 70,000 in 2021. What will their saving be in 2021?(f) Which of the following combinations of asset transactions could be consistent with the level of saving that youfound for this person in 2021?More than one answer can be correct-answer either "yes" or “no" for each of thefollowing combinations and explain your answer in terms of the increase in net worth implied by these transactions.F1: Buy 1000 worth of stocks, sell 4000 worth of jewelryF2: Buy a house worth 200,000; take out a 195,000 mortgage loanF3: Repay a 10,000 student loan; put 5000 in a bank accountF4: Repay a 7,000 personal loan, sell 2000 worth of stocks

(Only part e has been solved as mentioned) (e) The individual's income in 2019 and 2020 are DI0 =…

Answered: (e) Suppose that this person earns…

Business

Economics

(e) Suppose that this person earns 70,000 in 2021. What will their saving be in 2021?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Q: What is MARR and how do you choose it?

A: While making a decision to invest in a new project, the managers of companies do an analysis to…

Q: Ted's car is now worth $9000, which is 60% of what he paid for it. What did he pay for his car?

A: Present worth is present value or value for now which is calculated after wear and tear,depreciation…

Q: i need g to h

A: Thank you for the question. As per Bartleby's answering guidelines, we answer 3 subparts per…

Q: jsmod748o@emailify.shop

A: The email address you provided, j..o@emailify.shop, appears to be a disposable email address.…

Q: did you get 0.2Y?

A: The aggregate expenditure is the sum total of consumption, investment, government expenditures.

Q: The table shows a private open economy. All figures are in billions of dollars. Real GDP C+ lg Net…

A: The real GDP refers to the total goods and services produced in an economy in a given fiscal…

Q: Make flow chart of type of budget?

A: budget is a estimate expense and income for certain period of time

Q: When can a business owner is earning a profit but not covering expenses?

A: In a perfectly competitive industry, it is possible for a firm to earn loss or positive profits in…

Q: The South Korean Government in the 1970s decided to follow a strategy of increased investment in…

A: Scarcity refers to the limited availability of resources, that are used to produce goods and…

Q: How are the annual revenues and expenses estimated?

A: The annual revenue can be estimated by multiply the units of goods and services sold to the price…

Q: How purchasing power affect the business?

A: Meaning of Macroeconomics: The term macroeconomics refers to the situation of economic and…

Q: 24 20 Price and co st (dollars per arate)

A: In short run a firm should shut down when the price is equal of less than the average variable cost.…

Q: In a business Finance/Budgeting situation, create a budget for month-long vacation trip to Australia…

A: The technique of controlling one's income and expenses in order to meet financial objectives is…

Q: Discuss the way to conduct a systematic review of the product?

A: Systematic review A systematic review is a conceptual analysis. It proceeds to assemble all existing…

Q: Use image

A: The spending function represents the relationship between household spending and total income. When…

Q: Advantages and disadvantages of using technology - any ethical challenges?

A: Advantages of using technology Technology leads to increase in innovation.It creates new horizons of…

Q: what is continous and discrete payments?

A: Discretely compounded interest is calculated and added to the principal at specific intervals (e.g.,…

Q: Identify 3 home related tasks and explain how demanding each one is

A: Home-related tasks are one of the most underrated and fall under unpaid and therefore unacknowledged…

Q: usefulness of e-money and versus digital cash.

A: Firstly the barter system was used for buying and selling of goods in which goods were exchanged for…

Q: c) What is the cost of the consumer's original 2018 bundle at the new 2019 prices? How much…

A: Now, the price of food F1= $100 the price of housing increased H1 = $200. the cost of the…

Q: what are types of saving vehicles

A: Savings is the money left over after subtracting a person's consumption expenses from their…

Q: please re write part e in paper with pen , i

A: Total Cost of producing 100 units = 2800Total Cost of producing 500 units = 6000Profit function = -…

Q: Please help with part D

A: A Pareto efficient allocation is one in which one party can be made better off only at the cost of…

Q: Common technology uses on daily basis

A: Technology is the method by which we put scientific knowledge to practical use. It encompasses not…

Q: Offer, acceptance, and consideration are necessary elements of A.a warranty B.a…

Q: Where do you get the number 11?

A: Given, Marginal propensity to save (mps)=0.2 Marginal propensity to import (mpm)=0.1 Marginal income…

Q: What are the two kinds of Indian budget?

A: Introduction - The French word "bougettee," from which the English word "budget" is derived, refers…

Q: what is the title of coloum f and what does it mean?

A: Future worth is the value of an asset at a particular date. It computes the nominal future sum of…

Q: If a design will will it be perfect for everyone

A: Frequently, we design items to suit our requirements, age grades, foundation, capacities,…

Q: how did you get the 75 ??

A: Here, information about the price of own good, price of related good, income and units of…

Question

part e please

The consumption and saving functions in the Keynesian model
Suppose we observe that a person's disposable income (DI) is 50,000 in 2019 and 63,000 in 2020. Suppose we
observe that this person's consumption (C) is 47,000 in 2019 and 58,700 in 2020. Assume that this person's
consumption obeys the Keynesian consumption function, so that C = A + MPC*DI. Finally, assume that A and MPC are
unchanged between 2019 and 2020.
(a) Calculate the values of A and MPC for this consumer, and graph the consumption function. (Hint: subtract the C
function in 2019 from the C function of 2020).
(b) In general, saving is given by the formula S = DI - C. Calculate this person's saving in 2019 and 2020. Assuming that
this person's wealth (net worth) on January 1, 2019 was 80,000, what is their wealth on January 1, 2020? on January 1,
2021?
(c) In general, if consumption is given by the function C = A + MPC*DI, then saving will obey the saving function S = -A
+ (1 - MPC)*DI. Plot the saving function graphically for the consumer in this problem (using the values you found in
part (a)). What is this consumer's marginal propensity to save?
(d) Calculate the level of disposable income such that saving is exactly zero for this person. If disposable income is less
than this level, what happens to saving? Explain how a person can have negative saving, and give two examples of how
a person can finance negative saving.
(e) Suppose that this person earns 70,000 in 2021. What will their saving be in 2021?
(f) Which of the following combinations of asset transactions could be consistent with the level of saving that you
found for this person in 2021?
More than one answer can be correct-answer either "yes" or “no" for each of the
following combinations and explain your answer in terms of the increase in net worth implied by these transactions.
F1: Buy 1000 worth of stocks, sell 4000 worth of jewelry
F2: Buy a house worth 200,000; take out a 195,000 mortgage loan
F3: Repay a 10,000 student loan; put 5000 in a bank account
F4: Repay a 7,000 personal loan, sell 2000 worth of stocks

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

Where did the 1/2 come from or what is it.
This ended up being wrong. Can you please re-do? Thanks
after 2 years?
How HubSpot company managed to increase customers and sale?
how to calculate future value
What are the ethical issues that could be encountered when running an e-commerce platform?
Typed and correct answer please. I ll rate accordingly
see in