The completion of the table and to compute the marginal propensity to save and the marginal propensity to consume. A graph of the consumption function. Then add the investment function to obtain C+I. Under the graph of C+I, draw another graph that shows the investment and the saving curves. Note that the C+I curve crosses the 45-degree reference line in the upper graph at the same level of real GDP where the investment and the saving curves cross in the lower graph. Determine the level of real GDP? What is the numerical value of the multiplier? The equilibrium real GDP without investment and the multiplier effect from the inclusion to investment? What is the average propensity to consume at equilibrium real GDP? The effect on equilibrium real GDP, if the autonomous investment declines from $400 to $200.

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Chapter 12, Problem 2P

To determine

The completion of the table and to compute the marginal propensity to save and the marginal propensity to consume.

A graph of the consumption function. Then add the investment function to obtain C+I.

Under the graph of C+I, draw another graph that shows the investment and the saving curves. Note that the C+I curve crosses the 45-degree reference line in the upper graph at the same level of real GDP where the investment and the saving curves cross in the lower graph. Determine the level of real GDP?

What is the numerical value of the multiplier?

The equilibrium real GDP without investment and the multiplier effect from the inclusion to investment?

What is the average propensity to consume at equilibrium real GDP?

The effect on equilibrium real GDP, if the autonomous investment declines from $400 to $200.

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