04 Jun Question 12-2. Consider the table below when answering the
Question
12-2. Consider the table below when answering the
following questions. 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. (See
pages 253263.)
Real GDP
$ 2,000
4,000
6,000
8,000
10,000
12,000
Consumption
$2,200
4,000
______
______
______
______
Saving
$______
_____
_____
_____
_____
_____
Investment
$400
______
______
______
______
______
a. Complete the table. What is the marginal propensity to save? What is the marginal propensity to consume?
b. Draw a graph of the consumption function. Then add the investment function to obtain C + I.
c. Under the graph of C + I, draw another graph showing the saving and investment curves. Note
that the C + I curve crosses the 45-degree reference line in the upper graph at the same level
of real GDP where the saving and investment curves cross in the lower graph. (If not, redraw your graphs.) What is this level of real GDP?
d. What is the numerical value of the multiplier?
e. What is equilibrium real GDP without investment? What is the multiplier effect from the inclusion of investment?
f. What is the average propensity to consume at equilibrium real GDP?
12-4. Calculate the multiplier for the following cases.
(See page 267.)
a. MPS = 0.25
b. MPC = 5/6
c. MPS = 0.125
d. MPC = 6/7
12-6. The marginal propensity to consume is equal to 0.80. An increase in household wealth causes autonomous consumption to rise by $10 billion.
By how much will equilibrium real GDP increase at the current price level, other things being equal? (See page 267.)
12-12. Consider the diagram below, which applies to a nation with no government spending, taxes, and net exports. Use the information in the diagram
to answer the following questions, and explain your answers. (See pages 253263.)
Our website has a team of professional writers who can help you write any of your homework. They will write your papers from scratch. We also have a team of editors just to make sure all papers are of HIGH QUALITY & PLAGIARISM FREE. To make an Order you only need to click Ask A Question and we will direct you to our Order Page at WriteDemy. Then fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Fill in all the assignment paper details that are required in the order form with the standard information being the page count, deadline, academic level and type of paper. It is advisable to have this information at hand so that you can quickly fill in the necessary information needed in the form for the essay writer to be immediately assigned to your writing project. Make payment for the custom essay order to enable us to assign a suitable writer to your order. Payments are made through Paypal on a secured billing page. Finally, sit back and relax.
About Writedemy
We are a professional paper writing website. If you have searched a question and bumped into our website just know you are in the right place to get help in your coursework. We offer HIGH QUALITY & PLAGIARISM FREE Papers.
How It Works
To make an Order you only need to click on “Order Now” and we will direct you to our Order Page. Fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Are there Discounts?
All new clients are eligible for 20% off in their first Order. Our payment method is safe and secure.