Assume That Consumption Is Represented by the Following: C =

question 95

Essay

Assume that consumption is represented by the following: C = 400 + 0.5Y. Also assume that investment (I) equals 100.
(a) Given the information, calculate the equilibrium level of income.
(b) Given the information, calculate the level of consumption and saving that occurs at the equilibrium level of income.
(c) What is the marginal propensity to save?

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Definitions:

Face Value

The nominal or original value stated on a financial instrument, such as a bond or currency bill, not necessarily its current market value.

Possession

The state of having, owning, or controlling something, either tangibly or legally.

Holder In Due Course

A legal term for a person who has obtained a negotiable instrument in good faith and for value, and thus has certain rights above the original payee.

Breached The Contract

The act of failing to perform obligations stipulated in a contract, leading to a violation of the agreement.