Question

newconnectmeducation.com Tow connect Homework #3 chapters 10 & 110 Help Save & Exit Submit 34 Assuming the level of investment is $7 billion and independent of the level of total output complete the following table and determine the equilibrium levels of output and employment in this private closed economy Instructions: In the table below. enter your answers in the gray shaded cells as whole numbers. If you are entering any negative numbers be sure to include a negative sign in front of those numbers Possible Levels of Employment, Minions Real Domestic Output, Billions Consumption, Billions Saving, Billions 55 310 300 60330319 70 370 351 Equilibrium GOP $ billion ER xclul BN

Answer 1

Given: Investment = $7 billion

Employment	Real Output	Consumption	Savings
35	230	239	-9
40	250	255	-5
45	270	271	-1
50	290	287	3
55	310	303	7
60	330	319	11
65	350	335	15
70	370	351	19
75	390	367	23

^{Note: Savings = Output – Consumption}

a) Now, the economy is at equilibrium when: Savings = Investment, which occurs for

Equilibrium GDP = 310 and Equilibrium employment = 55

b) Now, MPC = (Change in Consumption)/(Change in Real Output)

Here, Change in Consumption = 6 and Change in Real Output = 20 throughout

Thus, MPC = 6/20 = 0.3

Again, MPS = 1 – MPC = 0.7