Complete the following table which depicts a hypothetical economy in which the m

Question

Complete the following table which depicts a hypothetical economy in which the marginal propensity to consume LOADING... is constant at all levels of real GDP and investment spending is autonomous. Equilibrium real GDP is equal to $8,000. There is no government.

Complete the following table which depicts a hypothetical economy in which the marginal propensity to consume is constant at all levels of real GDP and investment spending is autonomous. Equilibrium real GDP is equal to $8,000. There is no government Real GoP Consumption Saving Investment $2000 $2,000 $ 4000 3.500 5,000 80006,500 10000 8.000 12000 50

Explanation / Answer

Equilibrium real GDP is equal to $8,000. So, at equilibrium level of real GDP : savings = investment. And savings is the difference between real GDP and consumption. Therefore, savings = 8,000- 6500 = $1500 at equilibrium level of real GDP.

And investment spending is autonomous . Therefore, investment = saving = $1500 at each level.

So ,below is the table represents the savings and investment at each level of real GDP :

Real GDP Consumption Saving =Y-C Investment 2000 2000 0 1500 4000 3500 500 1500 6000 5000 1000 1500 8000 6500 1500 1500 (S=I at equilibrium level) 10000 8000 2000 1500 12000 9500 2500 1500

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