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Economics:

10th Edition
BOYES + 1 other
Publisher: Cengage Learning
ISBN: 9781285859460

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BuyFindarrow_forward

Economics:

10th Edition
BOYES + 1 other
Publisher: Cengage Learning
ISBN: 9781285859460
Chapter 9, Problem 6E
Textbook Problem
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Use the following table to answer these questions:

Chapter 9, Problem 6E, Use the following table to answer these questions: a. What is the MPG? b. What is the MPS? c. What

a. What is the MPG?

b. What is the MPS?

c. What is the MPI?

d. What is the level of aggregate expenditures at each level of income?

e. Graph the aggregate expenditures function.

To determine

(a)

    YCIGX
    $ 500$500$10$20$60
    $600$590$10$20$40
    $700$680$10$20$20
    $800$770$10$20$0
    $900$860$10$20-$20
    $1000$950$10$20-$40

The value of MPC.

Explanation of Solution

MPC = Change in consumptionChange in income

Wherein, Change in Income = Y1 - Y2

    Y
To determine

(b)

To write:

    YCIGX
    $ 500$500$10$20$60
    $600$590$10$20$40
    $700$680$10$20$20
    $800$770$10$20$0
    $900$860$10$20-$20
    $1000$950$10$20-$40

The value of MPS.

To determine

(c)

    YCIGX
    $ 500$500$10$20$60
    $600$590$10$20$40
    $700$680$10$20$20
    $800$770$10$20$0
    $900$860$10$20-$20
    $1000$950$10$20-$40

The value of MPI.

To determine

(d)

    YCIGX
    $ 500$500$10$20$60
    $600$590$10$20$40
    $700$680$10$20$20
    $800$770$10$20$0
    $900$860$10$20-$20
    $1000$950$10$20-$40

The aggregate expenditure at each level of income.

To determine

(e)

    YCIGX
    $ 500$500$10$20$60
    $600$590$10$20$40
    $700$680$10$20$20
    $800$770$10$20$0
    $900$860$10$20-$20
    $1000$950$10$20-$40

The aggregate expenditure graphs.

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