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Aggregate output/income consumption planned investment
2000 2100 300
2500 2500 300
3000 2900 300
4000 3700 300
4500 4100 300
5000 4500 300
5500 4900 300
- A. At each level of output calculate savings. At each level of output, calculate unplanned investment (inventory change). What is likely to happen to aggregate output if the economy produces at each levels indicated? What is the equilibrium level of output
- B. Over each range of invome (2000-2500, 2500-3000, and so on), calculate the marginal propensity to consume. Calculate the marginal propensity to save. What is the myltiplier?
- C. By assuming there is no change in the level of the MPC and MPS and planned investment jumps 200 and is sustained at that higher level, recomputed the table. What is the new equilibrium level of Y? is this consistent with what you compute using the multiplier.
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