( SO guys thanks in advance, but can you help me learn the logic behind the answer please)
( this is an economy with no foreign trade, and next periods GDP is determined b planned aggregate demand (C+I), and income can be spent or saved)
Current Income (Y) Planned Consumption (C) Planned Investment (I)
0,, 10,, 50
100,, 90,, 50
200,, 170,, 50
300,, 250,, 50
400,, 330,, 50
500,, 410,, 50
a) What is the current Equlibruim level of GDP
b) What is the marginal propensity to consume = I think it is 0.8
c) What is the multipler = I think it is 5
d) Following a financial crisis, planned investment decreases by 10. What will be
the total effect of this change in investment on national income and consumption?
Identify the new equilibrium levels of income and consumer spending. (2 marks)
e) With reference to the new level of planned saving, show that this new level of
national income is an equilibrium. (2 marks)
f) Represent the impact of this decrease in investment spending using the
injections/withdrawals diagram from the lecture notes. (3 marks)
Thanks guys I would really appricate it, and also could you explain how on the table C+I does not equal 60 but equals 100 ( for the first one), could you explain this to me please...
