a and b please? Dr. : Final Exam 8. Table Aggrogate Spending Real GDP YD 600 500

Question

a and b please?

Dr. : Final Exam 8. Table Aggrogate Spending Real GDP YD 600 500 500 1,000 900 1500 1,300 1,700 2,5002,100 3,000 2,300 3,500 2,500 4,000 3,300 600 600 600 600 600 600 1,500 3,000 terece Rel 11-21 (Table: Real GDp) Suppose the economy has no government spending and no foreign trade. With no taxes and transfers, real GDP is equal to disposable income (vo). Tha data in the accompanying table show consumption spending (C) and planned investment (Ipianned) a. What is the MPC in this economy? b. At what level of real GDP will the economy find its income expenditure equilibrium? ont Family fort Size 49. Two-thirds of total spending is usually attributed to: investment. consumption, net exports. government spending Remaining: 2:03:00 Start: 5:14 PM 630 PR

Explanation / Answer

a) MPC = Change in consumption / Change in Income = 400/500 = 0.8

b) Real GDP = C + I

At real GDP of 3500, above equation is satisfied as sum of C and I = 2900 + 600 = 3500

So, answer is 3500

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