Break-even level of income

Assignment Help Business Economics

Reference no: EM136783

Q. Assume that when an economy has a GDP of $500, Consumption is $550. The MPC is .75. Investment is 25. Begin the problem by setting up an Income/Consumption Schedule like the one on page 193 of your text. Set up only the first two columns (1) and (2).

Graph the Consumption Function.

Add Investment to the graph.

What is the multiplier?

What is the Break-Even level of Income? (Do not include Investment)

What is the Equilibrium level of Income? (Include Investment)

What would be the new equilibrium in this economy if Investment increased by $12?

Reference no: EM136783

Questions Cloud

Total revenue function : Using this demand function, find the total revenue function. What is the shape of the total revenue function.

Demand curve is much more inelastic : If the demand curve is much more inelastic than the supply curve, clarify whether buyers or sellers will shoulder more of the tax burden from a new tax placed on the sellers.

Absolute advantage in the production : Suppose each of the five sellers can supply at most one unit of the good. Elucidate the price when market quantity supplied is exactly 3.

Non-transactions deposits : The currency-deposit ratio has been and is likely to remain relatively stable. The ratio of non-transactions deposits to transactions deposits increased by a factor.

Break-even level of income : What would be the new equilibrium in this economy if Investment increased by $12.

Elasticity of demand for the product : Why would we expect that the price elasticity of demand for the product of an individual firm would typically be greater than the price elasticity of demand for the product overall.

Unemployment rate is at its highest level : The national economy has been in a slump for several years, but recent signs of strength in much of the economy have led many forecasters to conclude that an expansion could finally be in the offing.

Competitive market equilibrium : Calculate the firm's optimal output and profits if prices rise to $65 per unit and also calculate equilibrium output, price and profit levels if the firm is typical in its industry.

Expected rate of return on investment : Determined by the ability to find, attract, keep, develop, and tap into the most talented workforce that can be assembled.

User Account

All Pages