Posted: 5/5/2010 9:58:37 AM EDT
| I have this question that I can't figure out because I am not given income levels. So this is what is says. "Your nation has a MPC of 0.75, and savings has just risen by 25. - What will happen to income and by how much, if any?" So I am not sure where exactly to take this one. 0.75= .25 = 100. So if what I am being told perhaps the MPC was 100 percent, then MPS increased .25 resulting in a decrease in MPC. |
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Here's my stab at it:
There will be a change in income of 1. MPC + MPS = 1 MPS = change in savings / change in income So.... .75 + MPS = 1 ––––> MPS = .25 .25 = .25 / change in income ––––-> change in income = 1 Not sure what the 1 represents though (dollars, thousands, trillions, etc), without putting the question in context. Reference: http://www.amosweb.com/cgi-bin/awb_nav.pl?s=wpd&c=dsp&k=marginal+propensity+to+save |
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No worries. Been a few year since I've worked with a lot of that stuff.
Your class sounds like my microeconomics course. Professor barely spoke passable English, would say hello at the beginning of class, turn his back to the class, and spend the following hour scrawling indiscriminate equations across the board with little or no explanation. Didn't do too hot in that class. |
| Regarding, the change in income though for the final portion. I have a new question changing the MPC to .5 says nothing in regards to the savings amount. so .5+MPS=1 which means that MPS=.5 .5/Change in income, which is .5 right? So I get 1 again for the change in income? |
| The MPC is now 0.5, investment is $2000 government spending is $8000, consumption is $12,000, exports are $2000, and imports are $1,000. What is the level of income? If your net imports increase by $2000, what happens to the income, and how much? What will occur in the range of unemployment, and by how much? MPS changed from 0.5-0.6. How will this change your previous answers? |
