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Home / Questions / The following questions refer to this table AGGREGATE PLANNED OUTPUT

The following questions refer to this table AGGREGATE PLANNED OUTPUT

The following questions refer to this table:

AGGREGATE

 

PLANNED

OUTPUT/INCOME

CONSUMPTION

INVESTMENT

2,000

2,100

300

2,500

2,500

300

3,000

2,900

300

3,500

3,300

300

4,000

3,700

300

4,500

4,100

300

5,000

4,500

300

5,500

4,900

300

a. At each level of output, calculate saving. At each level of output, calculate unplanned investment (inventory change). What is likely to happen to aggregate output if the economy produces at each of the levels indicated? What is the equilibrium 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 sustained 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?

May 26 2020 View more View Less

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