Q: Assuming the level of investment is $16 billion and independent of level of total output, complete
the following table and determine the equilibrium level of output and employment in this private
economy. What are the sizes of MPC and MPS?
Possible Levels of
Employment ,
millions
Real domestic output
(GDP=DI),
Billions
Consumption
Billions
Savings
Billions
40
240
244
45
260
260
50
280
276
55
300
292
60
320
308
65
340
324
70
360
340
75
380
356
80
400
372
Answer:
Possible
Levels of
Employment
,
millions
Real
domestic
output
(GDP=DI),
Billions
Consumption
Billions
Savings
Billions
Aggregate
expenditure
C+I
Unplanned
change in
inventories
Tendency of
unemployment
,out put and
income
Mpc
Mps
40
240
244
-4
360
26
Decrease
0.75
o.25
45
260
260
0
276
16
Decrease
0.75
o.25
50
280
276
4
292
12
Decrease
0.75
o.25
55
300
292
8
308
8
Decrease
0.75
o.25
60
320
308
12
324
4
Decrease
0.75
o.25
65
340
324
16
340
0
Equilibrium
0.75
o.25
70
360
340
20
356
-4
Increase
0.75
o.25
75
380
356
24
372
-8
Increase
0.75
o.25
80
400
372
28
388
-12
Increase
0.75
o.25
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