Question
Using the following aggregate expenditures table, answer the questions that follow. Income (Y), in $ Consumption (C), in $ Saving (S), in $ 2,200 2,320
Using the following aggregate expenditures table, answer the questions that follow.
Income (Y), in $ Consumption (C), in $ Saving (S), in $
2,200 2,320 -120
2,300 2,380 -80
2,400 2,440 -40
2,500 2,500 0
2,600 2,560 40
2,700 2,620 80
2,800 2,680 120
2,900 2,740 160
3,000 2,800 200
a.Compute the APC when income equals $2,300 and the APS when income equals $2,800, What happens to APS as your income goes up?
b.Compute the MPC and MPS. Do they change with the change in income?
c.What does the simple Keynesian multiplier equal? What does it tell you?
d.If investment spending is equal to $120, what will be equilibrium income?
e.Using the following graph, show saving, investment, and equilibrium income.
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