The consumption function for a closed economy with no government sector is given by the equation: C = £200 million + 0.8 Y where C is aggregate consumption and Y is national income. (i) Calculate the value of aggregate savings if the level of national income is £4000 million. (ii) Calculate the equilibrium level of national income if the level of planned investment is £600 million (iii) Calculate the level of aggregate consumption at the equilibrium level of national income if the level of planned investment is £1000 million (iv) Calculate the change in national income if planned investment rose from £600 million to £800 million
The consumption function for a closed economy with no government sector is given by the equation: C = £200 million + 0.8 Y where C is aggregate consumption and Y is national income. (i) Calculate the value of aggregate savings if the level of national income is £4000 million. (ii) Calculate the equilibrium level of national income if the level of planned investment is £600 million (iii) Calculate the level of aggregate consumption at the equilibrium level of national income if the level of planned investment is £1000 million (iv) Calculate the change in national income if planned investment rose from £600 million to £800 million
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
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The consumption function for a closed economy with no government sector is given by the
equation:
C = £200 million + 0.8 Y
where C is aggregate consumption and Y is
(i) Calculate the value of aggregate savings if the level of national income is £4000 million.
(ii) Calculate the equilibrium level of national income if the level of planned investment is
£600 million
(iii) Calculate the level of aggregate consumption at the equilibrium level of national
income if the level of planned investment is £1000 million
(iv) Calculate the change in national income if planned investment rose from £600 million
to £800 million
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