Use the table below to solve this problem. APC 1.0167 1.0000 0.9857 0.9733 0.962

Question

Use the table below to solve this problem. APC 1.0167 1.0000 0.9857 0.9733 0.9625 0.9529 0.9444 APS -0.0167 0.0000 0.0143 0.0267 0.0375 0.0471 0.0556 0.0632 0.0700 MPC 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 MPS 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 evel of Output and Income Consumption Saving 16 480 520 560 600 640 680 720 760 800 496 528 560 592 624 656 688 720 752 -8 24 32 40 48 0.93680 0.9300 Suppose the wealth effect is such that a $10 change in wealth produces a $1 change in consumption at each level of income. Assume real estate prices tumble such that wealth declines by $320 Instructions: Enter your answers as whole numbers a. What will be the new level of consumption at the $680 billion level of disposable income? $ b. What will be the new level of saving? $

Explanation / Answer

New level of consumption at the $ 680 level of disposable income = 656 - 32 = $ 624

New level of saving = Disposable income - consumption level = 680 - 624 = $ 56

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