Step 2: The Effect of Saving on Total ExpendituresThe following table shows data for the economy before the decrease in saving. Suppose that the decrease in saving causes consumption to risefrom $280 million to $320 million. Assume Say's law holds in this economy.Fill in the data for the economy after the decrease in saving.Before Saving Decrease$280 million$200 million$250 million$500 million$300 millionConsumption (C)Investment (I)Government Purchases (G)Exports (EX)Imports (IM)As a result of the decrease in saving, total expenditures willAfter Saving Decrease$320 millionmillionmillion$500 million$300 million

To fill in the data for the economy after the decrease in saving, we need to understand the impact…

The following table shows data for the economy before the decrease in saving. Suppose that the decrease in saving causes consumption to rise from $280 million to $320 million. Assume Say's law holds in this economy. Fill in the data for the economy after the decrease in saving. Consumption (C) Investment (I) Government Purchases (G) Exports (EX) Imports (IM) Before Saving Decrease $280 million $200 million $250 million $500 million $300 million As a result of the decrease in saving, total expenditures will After Saving Decrease $320 million $ $ million million $500 million $300 million

The following table shows data for the economy before the decrease in saving. Suppose that the decrease in saving causes consumption to rise from $280 million to $320 million. Assume Say's law holds in this economy. Fill in the data for the economy after the decrease in saving. Consumption (C) Investment (I) Government Purchases (G) Exports (EX) Imports (IM) Before Saving Decrease $280 million $200 million $250 million $500 million $300 million As a result of the decrease in saving, total expenditures will After Saving Decrease $320 million $ $ million million $500 million $300 million

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter9: Aggregate Demand

Section: Chapter Questions

Problem 1.3P

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The following table shows data for the economy before the decrease in saving. Suppose that the decrease in saving causes consumption to rise from $280 million to $320 million. Assume Say's law holds in this economy. Fill in the data for the economy after the decrease in saving. Before Saving Decrease After Saving Decrease Consumption (C) $280 million $320 million Investment (I) $200 million $ million Government Purchases (G) $250 million $ million Exports (EX) $500 million $500 million Imports (IM) $300 million $300 million As a result of the decrease in saving, total expenditures will .
4. If you save $20 when you experience a $200 rise in your income:(A) your marginal propensity to save is 0.2. (B) your marginal propensity to consume is 0.9.(C) your marginal propensity to consume is 0.1.(D) your marginal propensity to consume is 0.8.
3. The following table shows income (Y) and consumption (C): Y C Calculate: 100 105 125 I. Marginal Propensity to Consume (MPC) II. Marginal Propensity to Save (MPS) 160 III. Average propensity to save (APS) 200 110 125 140
3. If the consumption function is C= $200 billion + 0.9Y, a) How much do consumers spend with income of $3 trillion? b) How much do they save?
6. Use the following data to work Problems (a), (b), and (c). You are given the information in the table about the economy of Australia. Disposable income Saving (billions of dollars per year) -5 100 20 200 45 300 70 400 95 a. Calculate the marginal propensity to save. b. Calculate consumption at each level of disposable income. c. Calculate the marginal propensity to consume.
The multiplier 15) If the consumption function is C = $800 billion + 0.8Y (a) What is the MPC? (b) How large is autonomous C? (c) How much do consumers spend with incomes of $4 trillion? (d) How much do they save?
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