The consumption function for a closed economy with no government sector is given by the equation: C = £200 million + 0.8 Y where Cis aggregate consumption and Y is national income. (i) Calculate the value of aggregate savings if the level of national income is £4000 million. (ii) Calculate the equilibrium level of national income if the level of planned investment is £600 million. (ii) Calculate the level of aggregate consumption at the equilibrium level of national income if the level of planned investment is £1000 million.

The consumption function for a closed economy with no government sector is given by the equation: C = £200 million + 0.8 Y where Cis aggregate consumption and Y is national income. (i) Calculate the value of aggregate savings if the level of national income is £4000 million. (ii) Calculate the equilibrium level of national income if the level of planned investment is £600 million. (ii) Calculate the level of aggregate consumption at the equilibrium level of national income if the level of planned investment is £1000 million.

Economics For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

Chapter19: The Keynesian Model In Action

Section: Chapter Questions

Problem 3SQ

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