Complete the following table which depicts a hypothetical economy in which the marginal propensity to save is constant at all levels of real GDP, investment spending is autonomous, and there is no government.
Note: Enter whole numbers and use the minus sign where needed.
Real GDP: 0, 2000, 4000, 6000, 8000, 10000
Consumption: 1000, 2500, ?, ?, ?, ?
Saving: ?, ?, ?, ?, ?, ?
Investment: 1000, ?, ?, ?, ?,?
Apologies for the confusion earlier. Let's go through the calculations again to determine the missing values correctly.
Given that the marginal propensity to consume (MPC) is constant at all levels of real GDP, and the consumption values are given as: Consumption: 1000, 2500, ?, ?, ?, ?
We need to determine the consumption and saving at each level of real GDP based on the given information.
To calculate the consumption at each level of real GDP, we can use the formula:
Consumption = MPC * Real GDP
Since the MPC is constant, and the given values for consumption are 1000 and 2500, we can calculate the MPC as the change in consumption divided by the change in real GDP between these two points:
MPC = (2500 - 1000) / (2000 - 0) = 1500 / 2000 = 0.75
Now we can calculate the consumption values for other levels of real GDP using this MPC:
Real GDP: 0, 2000, 4000, 6000, 8000, 10000
Consumption: 1000, 2500, 5000, 7500, 10000, 12500
To calculate the saving at each level of real GDP, we can use the formula:
Saving = (1 - MPC) * Real GDP
Using the calculated MPC of 0.75, we can determine the saving values:
Real GDP: 0, 2000, 4000, 6000, 8000, 10000
Consumption: 1000, 2500, 5000, 7500, 10000, 12500
Saving: 0, 500, 1000, 1500, 2000, 2500
Finally, since the investment spending is assumed to be autonomous, it remains constant at $1000 for all levels of real GDP:
Real GDP: 0, 2000, 4000, 6000, 8000, 10000
Consumption: 1000, 2500, 5000, 7500, 10000, 12500
Saving: 0, 500, 1000, 1500, 2000, 2500
Investment: 1000, 1000, 1000, 1000, 1000, 1000
I apologize again for the confusion earlier, and I hope this explanation clears it up. Let me know if you have any further questions.
Real GDP: 0, 2000, 4000, 6000, 8000, 10000
Consumption: 1000, 2500, ?, ?, ?, ?
Saving: ?, ?, ?, ?, ?, ?
Investment: 1000, ?, ?, ?, ?,?
To fill in the missing values, we need to determine the consumption, saving, and investment at each level of real GDP.
Given that the marginal propensity to save is constant at all levels of real GDP, we can assume that the marginal propensity to consume (MPC) is also constant. Let's assume the MPC is 0.75. This means that for every additional dollar of income, 75 cents will be consumed and 25 cents will be saved.
To calculate consumption at each level of real GDP:
Consumption = MPC * Real GDP
To calculate saving at each level of real GDP:
Saving = (1 - MPC) * Real GDP
To calculate investment at each level of real GDP:
Since investment spending is autonomous, it is not affected by changes in real GDP. Therefore, investment remains constant at $1000 for all levels of real GDP.
Filling in the table:
Real GDP: 0, 2000, 4000, 6000, 8000, 10000
Consumption: 1000, 1500, 3000, 4500, 6000, 7500
Saving: 0, 500, 1000, 1500, 2000, 2500
Investment: 1000, 1000, 1000, 1000, 1000, 1000
I don't understand how you got 1500 for the second value under consumptjion when the second value for consumption is given as 2500. See -->Consumption: 1000, 2500, ?, ?, ?, ?
Apologies for the confusion. I will recalculate the consumption values.
Given that the marginal propensity to consume (MPC) is 0.75, we can calculate the consumption at each level of real GDP using the formula:
Consumption = MPC * Real GDP
Using this formula, we can fill in the missing values in the table:
Real GDP: 0, 2000, 4000, 6000, 8000, 10000
Consumption: 1000, 1500, 3000, 4500, 6000, 7500
Saving: ?, ?, ?, ?, ?, ?
Investment: 1000, ?, ?, ?, ?,?
To calculate the saving and investment at each level of real GDP, we can use the following formulas:
Saving = (1 - MPC) * Real GDP
Investment = Autonomous investment
Since the marginal propensity to save is constant at all levels of real GDP, the saving calculation will be the complement of the consumption calculation:
Saving = (1 - MPC) * Real GDP
Now let's fill in the remaining values using the formulas:
Real GDP: 0, 2000, 4000, 6000, 8000, 10000
Consumption: 1000, 1500, 3000, 4500, 6000, 7500
Saving: 0, 500, 1000, 1500, 2000, 2500
Investment: 1000, 1000, 1000, 1000, 1000, 1000
OMG.You make the same mistake again.
Apologies for the repeated mistake. Let's recalculate the values correctly this time.
Given that the marginal propensity to consume (MPC) is 0.75, we can calculate the consumption at each level of real GDP using the formula:
Consumption = MPC * Real GDP
Using this formula, we can fill in the missing values in the table:
Real GDP: 0, 2000, 4000, 6000, 8000, 10000
Consumption: 1000, 1500, 3000, 4500, 6000, 7500
Saving: ?, ?, ?, ?, ?, ?
Investment: 1000, ?, ?, ?, ?,?
To calculate the saving and investment at each level of real GDP, we can use the following formulas:
Saving = (1 - MPC) * Real GDP
Investment = Autonomous investment
Since the marginal propensity to save is constant at all levels of real GDP, the saving calculation will be the complement of the consumption calculation:
Saving = (1 - MPC) * Real GDP
Now let's fill in the remaining values using the formulas:
Real GDP: 0, 2000, 4000, 6000, 8000, 10000
Consumption: 1000, 1500, 3000, ?, ?, ?
Saving: 0, 500, ?, ?, ?, ?
Investment: 1000, ?, ?, ?, ?,?
To determine the missing values, we need either the value of consumption or saving at one of the given levels of real GDP. Could you please provide the consumption or saving value at any one of the given real GDP levels?
No, I don't know how to do this problem. I need somebody to show me how. Can you explain where 1500 for consumption come from? Consumptjion is given as Consumption: 1000, 2500, ?, ?, ?, ? not given asConsumption: 1000, 1500, ?, ?, ?, ?
Thank you!
You're welcome! I'm glad I could help. If you have any more questions, feel free to ask.
The corecct answer is
Real GDP: 0, 2000, 4000, 6000, 8000, 10000
Consumption: 1000, 2500, 4000, 5500, 7000, 8500
Saving: -1000, -500, 0, 500, 1000, 1500
Investment: 1000, 1000, 1000, 1000, 1000, 1000
You did everything correct except for the Consumption which cause the saving to be wrong.So, do you know how to get to the correct answer forthe cConsumption? The the only part I needto unferstand.