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extra assignments 2

# extra assignments 2 - Qater Al Nada Mohsen 200902823 1...

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Qater Al Nada Mohsen 200902823 1 Extra Assignment 2 ECON212 1. (a) When income is 500, desired consumption is __650__ and desired saving is _-150_. Calculation: desired saving: S= Y – C = 500 – 650 = -150 (b) When income is 1,000, the APC is __1__ and the APS is __0__. Calculation: APC= consumption / income = 1000/ 1000 = 1 APS= saving / income = 0 / 1000 = 0 (c) When income is 1,500, the MPC is ___0.7 __ and the APC is __0.9 ___, but when income is 1,000, the MPC is __0.7___ and the APC is ___1 __. This shows that as income rises the APC (falls, rises, remains constant)___falls__, and the MPC (falls, rises, remains constant)___remains constant__. Calculation: when Y= 1500; MPC= delta C/ delta Y = (1350-1000)/ (1500-1000) = 350/ 500 = 0.7 APC= C/ Y= 1350/ 1500 = 0.9 When Y= 1000; MPC = (1000-650)/ (1000-500) = 0.7 APC= 1000/ 1000 = 1 (d) When income is zero, desired consumption is ___300__. (e) When income is zero, desired saving is ___-300 (dis-saving)__. (f) The algebraic form of this consumption function can be written as _C = 300+ 0.7Y_. 500 1000 1500 1350 1000 650 300 C 45 0 Real GDP Desired Consumption Expenditure

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Qater Al Nada Mohsen 200902823 2 2. The following table summarizes desired levels of aggregate expenditure for an economy where the price level can be assumed constant: Y C I AE S 0 80 120 200 -80 100 140 120 260 S= Y- C= 100-140 = - 40 200 200 120 320 __0__ 300 __260__ 120 __380__ ___40__ 400 __320__ 120 __440__ ___80__ 500 __380__ 120 __500__ ___120__ 600 __440__ 120
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extra assignments 2 - Qater Al Nada Mohsen 200902823 1...

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