The following questions refer to this table:
a.At each level of output, calculate saving. At each level of out-
put, calculate unplanned investment (inventory change).
What is likely to happen to
produces at each of the levels indicated? What is the equilib-
rium level of output?
b.Over each range of income (2,000 to 2,500, 2,500 to 3,000, and
so on), calculate the marginal propensity to consume. Calculate
the marginal propensity to save. What is the multiplier?
c.By assuming there is no change in the level of the MPC and
the MPS and planned investment jumps by 200 and is sus-
tained at that higher level, recompute the table. What is the
new equilibrium level of Y? Is this consistent with what you
compute using the multiplier?
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