Question

$20 Real Disposable Real Planned Incone Consumption $0 $50 $80 $75 $80 $100 $100 $125 $120 $150 $140 Use the above table. The MPS is O 0.09. 0.20. 0.80 O 0.91 QUESTION 11 Net Disp. Consmp. Tax Income Spending Plnd Pind Saving Invst Real GDP 10 11 Pind Export Exp. 10.8 6.8 116 NNNNNNN Ե Ե Ե Ե Ե Ե Ե OOOO 12.4 13.2 100 13 1.5 148 10.8 16 116 Note: Amounts in billions. 14 Refer to the above table. If real GDP is $12 billion, total planned expenditures and unplanned inventory changes are respectively $13.2 billion and -$0.8 billion. $12.4 billion and $0.4 billion. $0 and $14 billion. $12.4 billion and $0.4 billion.

Answer 1

Question 10

The given table shows that when real disposable income increases from $0 to $50, real planned consumption increases from $20 to $60.

Change in income = $50 - $0 = $50

Change in consumption = $60 - $20 = $40

Calculate MPC -

MPC = Change in consumption/Change in income

MPC = 40/50

MPC = 0.80

The MPC is 0.80

Calculate MPS -

MPS = 1 - MPC

MPS = 1 - 0.80

MPS = 0.20

So,

Using the above table, The MPS is 0.20.

Question 11

The given table shows that when real GDP is $12 billion then total planned expenditure is $12.4 billion.

Calculate the unplanned inventory changes -

Unplanned inventory changes = Real GDP - Total planned expenditure

Unplanned inventory changes = $12 billion - $12.4 billion = -$0.4 billion

The unplanned inventory changes are -$0.4 billion.

Thus,

The correct answer is the option (d) [$12.4 billion and -$0.4 billion].