Macro Help

Calculating Marginal Propensity to Save and Marginal Propensity to Consume

Consider the following table. For this hypothetical economy, the marginal propensity to save is constant at all levels of real GDP, and investment spending is autonomous. There is no government.



You need to:
1. Complete the table.

2. Calculate the marginal propensity to save.

3. Calculate the marginal propensity to consume.

4. Draw a graph of the consumption function using the Grapher. Then, add the investment function to obtain C+I.

5. Draw another graph showing the saving and investment curves under the C+I graph. What is the level of real GDP?

6. Calculate the numerical value of the multiplier.

7. Calculate the equilibrium real GDP without investment. What is the multiplier effect from the inclusion of investment?

8. Calculate the average propensity to consume at equilibrium real GDP.

9. If equilibrium real GDP is $8,000 when investment is $400, explain what happens to equilibrium real GDP if autonomous investment declines to $200.

(2) Calculating Average Propensity to Save and Average Propensity to Consume

A nation's consumption function (expressed in millions of inflation-adjusted dollars) is
C=$800 +0.80Y. There are no taxes in this nation.

Now answer the following questions:
1. What is the value of autonomous saving?
2. What is the value of the multiplier?

  1. 👍 0
  2. 👎 0
  3. 👁 473
  1. Take a shot. what do you think.
    Hint, S=I, where I is composed of intended or autonomous investment Ia and unintended investment Ib (e.g., change in inventories). Hint 2. Multiplier is 1/MPS

    1. 👍 0
    2. 👎 0
  2. I don't know missing something

    1. 👍 0
    2. 👎 0

Respond to this Question

First Name

Your Response

Similar Questions

  1. Economics

    . Consider total cost and total revenue given in the table below: QUANTITY 0 1 2 3 4 5 6 7 Total cost $8 $9 $10 $11 $13 $19 $27 $37 Total revenue 0 8 16 24 32 40 48 56 a. Calculate profit for each quantity. How much should the

  2. Economics

    Why do people routinely stuff themselves at all-you-can-eat buffets? Explain in terms of both utility and demand theories. At any level, the marginal cost of take another bite at an all-you-can-eat place is zero. In terms of

  3. Managerial Economics

    Suppose Bill is on a low-carbohydrate diet. He can eat only three foods: Rice Krispies, cottage cheese, and popcorn. The marginal utilities for each food are tabulated below. Bill is allowed only 167 grams of carbohydrates daily.

  4. math

    Suppose C(x) measures an economy's personal consumption expenditure and x the personal income, both in billions of dollars. Then the following function measures the economy's savings corresponding to an income of x billion

  1. math/economics in calculus

    The average cost of manufacturing a quantity q of a good, is defined to be a(q) = C(q)/q. The average cost per item to produce q items is given by a(q) = 0.01q2 − 0.6q + 13, for q >0. I know that the total cost is

  2. math

    Suppose a certain economy's consumption function is as follows, where C(x) and x are measured in billions of dollars. C(x) = 0.76x^1.1 + 18.19 Find the marginal propensity to consume (dC/dx) when x = 7. (Round your answer to three

  3. Economics

    The value of the marginal propensity to save is 0.2. If real GDP increases by $50 billion, this situation was the result of an increase in the aggregate expenditures schedule of: a. $10 billion b. $15 billion c. $16 billion d. $40

  4. economics

    Questions from Andreas Software Business A. How many software programs should Andrea sell to make the most profit? __________ What would her profit be? ___________ What is the marginal revenue for this number of programs?

  1. economics

    Suppose the income tax rate schedule is 0 percent on the first $10,000; 10 percent on the next $20,000; 20 percent on the next $20,000; 30 percent on the next $20,000; and 40 percent on any income over $70,000. Family A earns

  2. ECON-HELP!!

    1. In the Country of Wiknam, the velocity of money is constant. Real GDP grows by 5 percent per year, the money stock grows by 14 percent per year, and the nominal interest rate is 11 percent. What is the real interest rate? 2.

  3. Algebra

    83. Minimizing Marginal Cost The marginal cost of a product can be thought of as the cost of producing one additional unit of output. For example, if the marginal cost of producing the 50th product is $6.20, it cost $6.20 to

  4. advanced math

    The marginal cost of a product can be thought of as the cost of producing one additional unit of output. For example, if the marginal cost of producing the 50th product is $6.20, it cost $6.20 to increase productionn from 49 to 50

You can view more similar questions or ask a new question.