Fetermine equilibrium output, the mpc and mps

Reference no: EM1373755

1. Suppose that the level of investment is $16 billion and independent of level of total output, complete the accompanying table and estimate the equilibrium levels of output and employment in private closed economy. Determine the sizes of the MPC and MPS?

Possible Levels Real Domestic Consumption, Savings,
of Employment, Output (GDP=DI) Billions Billions
Millions Billions

40 $240 $244 $________
45 260 260 ________
50 280 276 ________
55 300 292 _________
60 320 308 ________
65 340 324 ________
70 360 340 ________
75 380 356 ________
80 400 372 ________

2. Using the consumption and saving data in question 1 and assuming investment is $16 billion, what are saving and planned investment at the $380 billion level of domestic output? What are saving and actual investment at that level? What are saving and planned investment at the $300 billion level of domestic output? What are the levels of saving and actual investment? Use the concept of unplanned investment to explain adjustment toward equilibrium from both the $380 billion and the $300 billion levels of domestic output.

Reference no: EM1373755

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