Given the following table. Income (RM million) Consumption (RM million) 0 100 100 150 200 200 300 250 400 300 500 350 How much is the autonomous consumption in the economy? How much investment should be increased to achieve an income of RM400 million? Calculate the MPS. Derive the consumption function.
Given the following table. Income (RM million) Consumption (RM million) 0 100 100 150 200 200 300 250 400 300 500 350 How much is the autonomous consumption in the economy? How much investment should be increased to achieve an income of RM400 million? Calculate the MPS. Derive the consumption function.
Chapter9: Aggregate Demand
Section: Chapter Questions
Problem 1.1P
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Question
1. Given the following table.
Income (RM million) |
Consumption (RM million) |
0 |
100 |
100 |
150 |
200 |
200 |
300 |
250 |
400 |
300 |
500 |
350 |
- How much is the autonomous consumption in the economy?
- How much investment should be increased to achieve an income of RM400 million?
- Calculate the MPS.
- Derive the consumption function.
2. Given the following information,
C = 500 + 0.7Yd
T = 0.2Y
I = 400
G = 100
- Calculate the
national income equilibrium. - Based on your answer in (a), draw the aggregate expenditure graph.
- Suppose that investment changes by 300, what would happen to the national income equilibrium?
- Suppose that tax (T) changes, and the new T is T = 0.2 Y + 50, calculate the new national income equilibrium.
3. Given the following information,
S = -200 + 0.3Y
I = 100
- Calculate the national income equilibrium by using the Leakage-Injection approach.
- Calculate the value of saving.
- Draw the aggregate expenditure graph.
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