The model of national economy is characterised by the following data: Household consumption C-400+0.9 DI Gross investment Ig 200 Government spending G-250 Sum of Taxes T 150 Disposable income DI = Y-T Calculate: a) Equilibrium level of income Y; b) Calculate the value of Marginal propensity to consume and value of Marginal propensity to save; c) Private consumption at macroeconomic equilibrium;

The model of national economy is characterised by the following data: Household consumption C-400+0.9 DI Gross investment Ig 200 Government spending G-250 Sum of Taxes T 150 Disposable income DI = Y-T Calculate: a) Equilibrium level of income Y; b) Calculate the value of Marginal propensity to consume and value of Marginal propensity to save; c) Private consumption at macroeconomic equilibrium;

ENGR.ECONOMIC ANALYSIS

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Chapter1: Making Economics Decisions

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Question

The model of national economy is characterised by the following data:
Household consumption C-400+0.9 DI
Gross investment Ig 200
Government spending G-250
Sum of Taxes T-150
Disposable income DI = Y-T
Calculate:
a) Equilibrium level of income Y;
b) Calculate the value of Marginal propensity to consume and value of Marginal propensity to save;
c) Private consumption at macroeconomic equilibrium;
d) Develop equation of saving and calculate amount of saving at the point of equilibrium level of income.

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these bottom two are solved I am just struggling with how to graph the consumption function and the breakeven condition for this problem and to Point out the income and consumption values relevant for these problems: 3. The marginal propensity to consume (MPC) is 0.75, which means that households spend 75% of each additional dollar of income. The starvation-level consumption is 6, which means that households will consume at least 6 dollars, regardless of their income. Therefore, the amount that households will save can be found by subtracting their minimum consumption level from their gross income, multiplying the difference by the MPC, and subtracting the lump-sum tax: Savings = (1 - MPC) * (Gross Income - Starvation-level Consumption) - Lump-sum Tax Savings = (1 - 0.75) * (40 - 6) - 10 Savings = 0.25 * 34 - 10 Savings = 1.5 Therefore, households will save $1.5. 3. a) How should the lump-sum income tax change to allow households to save 3? To allow households to save…