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…

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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