Q1:You are given the following income-expenditures model for an economy : Consumption C = 300 + .64Yd Tax (T) = $60 Government expenditure G = $100 Investment (I) = $120 From above data calculate the follows: 3. At the equilibrium level of income, what is the amount of savings? 4. Marginal Propensity of Saving (MPS)

Q1:You are given the following income-expenditures model for an economy : Consumption C = 300 + .64Yd Tax (T) = $60 Government expenditure G = $100 Investment (I) = $120 From above data calculate the follows: 3. At the equilibrium level of income, what is the amount of savings? 4. Marginal Propensity of Saving (MPS)

Economics For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

Chapter18: The Keynesian Model

Section: Chapter Questions

Problem 9SQP

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Q3. Real GDP Consumption Planned Investment Government Purchases Net Exports $5,000 $4,500 $500 $325 -125 6,000 5,300 $500 $325 -125 7,000 6,100 $500 $325 -125 8,000 6,900 $500 $325 -125 Answer the questions based on the table below. The values are in millions of dollars. What is the equilibrium level of real GDP? What is the MPC? If potential GDP is $7,000 million, is the economy at full employment? If not, what is the condition of the economy? If the economy is not at full employment, by how much should government spending increase so that the economy can move to the full employment level of GDP?
Q8. For the data in the following table, the consumption function is C = 800 + 0.6(Y – T). Fill in the columns in the table and identify the equilibrium output. Output Net Taxes Disposable Income Consumption Saving Planned Investment Government Expenditure Planned AE Unplanned Inventory change 2100 100 300 400 2600 3100 3600 4100 4600 5100
Which of the following statements is most accurate? a.Most of the variation in consumption spending can be explained by changes in debt b. There is no single factor that explains much of the variation in consumption spending c. Most of the variation in consumption spending can be explained by changes in the interest rate. d. Most of the variation in consumption spending can be explained by changes in wealth e. most of the variation in consumption spending can be explained by changes in disposable income.
Why is saving called a leakage? Why is planned investment called an injection? Why must saving equal planned investment at equilibrium GDP in the private closed economy? Are unplanned changes in inventories rising, falling, or constant at equilibrium GDP? Explain.