Question

1) Suppose consumption is $7,500 when income is $4,000 and the MPS equals 0.4. When income increases to $6,000, consumption is

a) $8,700.

b) $8,300.

c) $8,050.

d) $9,500.

2) If Teena's consumption function is of the form [C = 200 + 0.75Y], her saving equals zero at an income level of

Group of answer choices

a) 800.

b) 675.

c) 150.

d) 1,500.

3) The Tiny Tots Toy Company manufactures only sleds. In 2016 Tiny Tots manufactured 10,000 sleds, but sold only 8,000 sleds. In 2016 Tiny Tots' change in inventory was

a) 1,000 sleds.

b) 2,000 sleds.

c) -2,000 sleds.

d) 3,000 sleds.

4) Which of the following is not considered investment?

a) the acquisition of capital goods

b) the increase in planned inventories

c) the purchase of government bonds

d) the construction of a new factory

5) Assume that in Jabara, planned investment is $30 billion, but actual investment is $45 billion. Unplanned inventory investment is

a) -$15 billion.

b) $75 billion.

c) $15 billion.

d) -$75 billion.

Answer 1

MPS = 0.4 mpct MPS = 1 mpc to 4 = 1 MPC=0.6 MPC = AC AY AY = 6000-4000 = 2000 0.6 = AC 2000 1200 = AC Consumption = 7500t 1200 = $ 8700 c=200+ 0.754 S=-200+ 0.25% s= 0 =-200 +0-257 200 zy 0.25 800 = y Income = I 800 3] Change in Inventory => closing - opening giventory = 8000-10ooo - - 2000 sleds 5 unplanned Investment = Actual Planned grecestment = 245 billion - $30 billion Z is billion. Shot on realme 3

Answer 4 - option B

Increase in planned inventory

The inventory comes under the working capital or the part of the operating activity of the business. Hence it will not be an increase in the investment.

The solutions of the other questions are given in above handwritten form.