Question

Income    (Yd)	Consumption Expenditure	Saving	Investment Expenditure	Government Expenditure	Net Export Expenditure	Aggregate Expenditure
$8000	$11,000		$2,500	$5,000	$12,500
12,000	14,000		2,500	5,000	12,500
20,000	20,000		2,500	5,000	12,500
30,000	27,500		2,500	5,000	12,500
50,000	42,500		2,500	5,000	12,500
100,000	80,000		2,500	5,000	12,500

1.Calculate savings, autonomous consumption, MPC, MPS, break even income, and the equilibrium level of income (Y = AE = C + I + G + NX) in the above given information.

2. Draw a graph showing disposable income (Yd) on the horizontal axis and aggregate expenditures (AE)

on the vertical axis with a 45 degree line. Graph consumption curve (CC) and AE (AE = C + I) curve on this graph. Indicate equilibrium level of income on this graph.

Answer 1

1.

Income (Yd)	Consumption	Saving	Investment	Government	Net Export	Aggregate Expenditure (Y)	MPC = Change in consumption/change in income	MPS = 1-MPC
8,000	11000	-3000.00	2500	5,000	12,500	31000.00
12,000	14000	-2000.00	2,500	5,000	12,500	34000.00	0.75	0.25
20,000	20000	0.00	2,500	5,000	12,500	40000.00	0.75	0.25
30,000	27500	2500.00	2,500	5,000	12,500	47500.00	0.75	0.25
50,000	42,500	7500.00	2,500	5,000	12,500	62500.00	0.75	0.25
100,000	80,000	20000.00	2,500	5,000	12,500	100000.00	0.75	0.25

Break even income is $20,000 where C = S.

2. Equilibrium E = 30000