HW #13, PART 1 A. Using the consumption function C = 60 + (9/10) Ya, complete the following table. All figures are in billions of dollars. Note that the MPC and MPS are printed between the different levels of disposable income shown. Yd C S APC = C/ d MPC = AC/AYd APS = S/Yd MPS = AS/AYa 60 - 60 90/100 = .9 10/100 = 1 100 150 - 50 150/100 = 1.500 901 102= 0.9 - 50/100 = -.500 10/100 = 1 200 240 - 40 240/200 = 1.200 40/200 = -.200 180/200 = .9 20/200 = 400 420 - 20 420/400 = 1.050 - 20/400 = -.050 600/600 = 1000 180/200 = .9 20/200 = .1 600 0/600 = 0 180/200 = .9 201 800= .025 20/200 = 800 780 + 20 780/800 = .975 20 1209=.L 1000 960 + 40 960/ 1010= .960 180, 209-0.9 180/200 = .9 40 1000= 6.040 20/200 = 1 1200 1140 + 60 1140/1200 = .950 60/1200 = .050 = not defined with Yd = 0 Ya B. What relation between consumption and saving (C and S, APC and APS, and MPC and MPS) do you see in this table? C + S =_ APC + APS = _ MPC + MPS = C. Circle the correct answer in the parentheses of each of the following: When the APC is greater than one, saving is (negative/positive/ zero). When the APC is equal to one, saving is (negative/positive/zero). When the APC is less than one, saving is (negative/positive/zero). D. Note the top graph on p. 133, which has Ya on the horizontal axis and C on the vertical axis. Also note the 450 line that has been drawn on this graph. Using points 1, 2, and 3 on this line, answer the following questions: At point 1 consumption equals At point 2 consumption equals disposable income equals and saving equals At point 3 consumption equals disposable income equals and saving equals disposable income equals and saving equals What is the relationship between consumption, disposable income and savings along the 450 line in the top graph on p. 133? 1200 E. Plot the data in columns 1 and 2 above (Yd and C) on the top graph on p. 133, plot the data in columns 1 and 3 (Ya and S) on the bottom graph on p. 133. Note Yd is on the horizontal axis of both graphs. F. How does the break-even point, where consumption (C) equals disposable income (Yd), show on the top graph? G. How does this point show on the bottom graph? H. How do MPC and MPS show on these two graphs