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4.3 The following questions refer to this table: Aggregate Output/Income Consumption Planned Investment 1,000 1,500 1,500 1,875 250 250 2,000 2,250 250 2,500 3,000 2,625 3,000 250 250 3,500 3,375 250 4,000 4,500 3,750 4,125 250 250 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 (1,000 to 1,500, 1,500 to 2,000, 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 125 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?

4.3 The following questions refer to this table: Aggregate Output/Income Consumption Planned Investment 1,000 1,500 1,500 1,875 250 250 2,000 2,250 250 2,500 3,000 2,625 3,000 250 250 3,500 3,375 250 4,000 4,500 3,750 4,125 250 250 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 (1,000 to 1,500, 1,500 to 2,000, 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 125 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?

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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4.3 The following questions refer to this table: Aggregate Output/Income Planned Investment Consumption 1,000 1,500 1,500 1,875 2,250 250 250 2,000 2,500 3,000 250 2,625 3,000 250 250 3,500 3,375 250 4,000 4,500 3,750 4,125 250 250 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 (1,000 to 1,500, 1,500 to 2,000, 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 125 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?
Transcribed Image Text:4.3 The following questions refer to this table: Aggregate Output/Income Planned Investment Consumption 1,000 1,500 1,500 1,875 2,250 250 250 2,000 2,500 3,000 250 2,625 3,000 250 250 3,500 3,375 250 4,000 4,500 3,750 4,125 250 250 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 (1,000 to 1,500, 1,500 to 2,000, 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 125 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?
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