Question
Assume consumption is represented by the following: C = 400 + .5Y. Also assume that planned investment (I) equals 100. (a) Given the information, calculate
- Assume consumption is represented by the following: C = 400 + .5Y. Also assume that planned investment (I) equals 100.
(a) Given the information, calculate the equilibrium level of income.
(b) Given the information, calculate the level of consumption and saving that occurs at the equilibrium level of income.
(c) Write out the saving function for this economy. What is the marginal propensity to save?
2.Draw a circular flow diagram with households and firms and with government. Label the markets and the flows in the circular flow diagram.
3.Using the figures below calculate GNP, NNP, National Income, Personal Income and Disposable income.
Consumption Expenditure 6,258
Investment 1,623
Government Expenditure on goods & services 1,630
Exports of goods & services 998
Imports of goods & services 1,252
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started