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Presume we are given the following information for the economy of Birch enough. GDP is $12,000, planned investment spending is $400 and autonomous consumption is $600. The marginal propensity to consume is 0.82.

1) Derive the consumption function.

2) How much is consumption in this economy.

3) How much is unplanned inventory investment?

4) What is the value of the multiplier for this economy?

5) Compute planned aggregate spending. e) Solve for the equilibrium level of real GDP.

6) Given this income-expenditure equilibrium, what will firms most likely do?

7) Given the consumption function you found in part a, what is the equation for the corresponding savings function?

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Microeconomics, Economics

Category:- Microeconomics
Reference No.:- M91225222

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