Consider a hypothetical economy in which the marginal propensity to consume (MPC) is 0.75. That is, if disposable income increases by $1, consumption increases by 75¢. Suppose further that last year disposable income in the economy was $500 billion and consumption was $450 billion.   From the preceding data, you know that the level of saving in the economy last year was $________ billion and the marginal propensity to save in this economy is ____________. Suppose that this year, disposable income is projected to be $700 billion. Based on your analysis, you would expect consumption to be $_____ billion and saving to be $________ billion.

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5:06 A & & & P M Page 4 of 5 QUESTION 4 The figure below shows the planned Aggregate Expenditure function for a hypothetical economy (AEp = 1,000 + 0.5 * Y). In this economy, taxes and transfers are equal to zero, so YD =Y. What is the value of unplanned investment expenditure (Iµ) when GDP = 3,000? Suppose that, next period, autonomous consumption increased by 100 and every thing else remained the same. Under these new circumstances, what would the value of unplanned investment be when GDP = 3,000? 5,000 4, 500 4, 000 3, 500 3,000 AEp = 1,000 + 0.5*Y 2, 500 2000 1, 500 1,a00 500 500 1,000 1, 500 2,000 2 500 3,000 3,500 4,000 4,500 5,000 REAL GDP Page 5 of 5 QUESTION A5 a. Suppose that some kind of significant economic event has occurred, and you learn that the event will de finitely cause the aggregate price level to decrease, but that its effect on short-run equilibrium real GDP cannot be determined without knowing the exact PLANNED AGGREGATE EXPENDITURE

Given, autonomous consumption Co = a = 4.0, marginal propensity to consume MPC = 0.80, investment | = 8.5, government expenditure G = 9.0, exports X = 1.5, imports M = 0.75, and taxes T = 0 ($, billion): i. What is the level of consumption and saving if income is 10.0? ii. What is the equilibrium output level YE (assume this is real GDP) for the economy?

1) Following is information for the economy of Donut. All units are million dollars. Their autonomous consumption is $500, and the marginal propensity to consume is 0.6. Investment spending is constant at $300, and government expenditure is constant at $200. Exports are constant at $100 and imports are constant at $230. Net taxes are constant at $100. Calculate and state your answers for the following questions. A.. What is the value of private saving in this economy when the real GDP is $500? B..What is the value of autonomous aggregate expenditure i.e. AE0? C..What is the size of the multiplier in this economy? D... What is the value of aggregate planned expenditure when real GDP is $1000?

Use the figure to calculate the marginal propensity to consume (MPC) between point A and point B. MPC = (Enter your response as a real number rounded to two decimal places.) C Real consumption spending ($ billions) Consumption and National Income $3,750 $2,250 B $3,000 $5,000 Real national income or real GDP ($ billions) C

What will the multiplier be when the MPS is 0, 0.4, 0.6, and 1? What will it be when MPC is 1, 0.90, 0.67, 0.50, and 0? How much of a change in GDP will result if firms increase their level of investment by 8 billion and the MPC is 0.80? If the MPC instead of 0.67?

Suppose that a certain country has an MPC of .9 and a real GDP of $400 billion. If its investment spending decreases by $4 billion, what will be its new level of real GDP?

fill blank based on data provided

Refer to the accompanying figures, with consumption schedules in figure (A) and saving schedules in figure (B), which correspond to each other across different levels of disposable income. If, in figure (A), consumption shifts from A2 to A3 because of a change in taxes, then in figure (B) line B2 will shift to B3. B1 will shift to B2. B2 will shift to B1. B3 will shift to B2.