Question

# Income    (Yd) Consumption Expenditure Saving Investment Expenditure Government Expenditure Net Export Expenditure Aggregate Expenditure \$8000...

 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.

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

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