Question

The following table provides data for output (real GDP) and saving. a. Fill in the missing numbers (gray shaded cells) in the table.

student submitted image, transcription available below

Instructions: In the table, round your answers to 3 decimal places. If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers.


What is the value of the marginal propensity to consume? .

What is the value of the marginal propensity to save? .

b. What is the break-even level of income in the table?

Instructions: Enter your answer as a whole number.

Break-even level of income = $.

What is the term that economists use for the saving situation shown at the $480 level of income? (Click to select)DissavingSaving.


c. For each of the following items, indicate whether the value in the table is either constant or variable as income changes:

MPS: (Click to select)ConstantVariable as income changes.

APC: (Click to select)ConstantVariable as income changes.

MPC: (Click to select)ConstantVariable as income changes.

APS: (Click to select)ConstantVariable as income changes.

Answer 1

The value of the marginal propensity to consume is 1 and the value of the marginal propensity to save is 0.

Step-by-step explanation:

The marginal propensity to consume (MPC) represents the change in consumption for a given change in income. To calculate MPC, subtract the initial consumption level from the final consumption level and divide it by the change in income. In this case, the initial consumption level is $240 and the final consumption level is $300, while the change in income is $300 - $240 = $60.

MPC = (Final Consumption - Initial Consumption) / Change in Income

Therefore, MPC = ($300 - $240) / $60 = $60/$60 = 1.

The marginal propensity to save (MPS) is the complement of the MPC, since MPC + MPS = 1. Therefore, MPS = 1 - MPC = 1 - 1 = 0.

Answer 2

The marginal propensity to consume is 0.733 and the marginal propensity to save is 0.267. The break-even level of income is $240. The saving situation shown at the $480 level of income is saving.

Step-by-step explanation:

The value of the marginal propensity to consume can be calculated by taking the change in consumption divided by the change in income. In this case, the change in consumption is $240 - $20 = $220, and the change in income is $300 - $0 = $300. Therefore, the marginal propensity to consume is $220/$300 = 0.733.

The value of the marginal propensity to save can be calculated by subtracting the marginal propensity to consume from 1. So, in this case, the marginal propensity to save is 1 - 0.733 = 0.267.

In the table, the break-even level of income is the level of income where consumption equals income. So, in this case, the break-even level of income is $240.

The saving situation shown at the $480 level of income is saving, because saving is positive at that income level.

For each of the following items, the value in the table is constant as income changes: MPS, APC, and APS. The value of MPC is variable as income changes.