Question

1. Use the graph for Jerry's Consumption Function to answer a-d. Jerry's Consumption Function А с Jerry's consumption - Y Y2 Jerry's Income a. The line segment BD represents Jerry's b. Jerry's consumption equals his income at Point c. Along the line segment AC, Jerry's saving is d. Along the segment AB, Jerry's saving is 2. Use the following table to complete a-f. All Figures in Billions of Dollars Aggregate Output Aggregate Consumption Planned Investment 200 300 100 400 450 100 600 600 800 750 100 1,000 900 100 100 a. At an aggregate output level of $400 billion, planned expenditure equals b. At an aggregate output level of $800 billion, aggregate saving c. At an aggregate output level of $200 billion, the unplanned inventory change is d. At an aggregate output level of $600 billion, the unplanned inventory change is e. The equilibrium level of aggregate output equals f. The MPC in this economy is

how do you correctly do these problems? I am so confused. my economics teacher is not a math teacher.

Answer 1

Ans 1. a) The line segment BD represents Jerry's autonomous consumption.

This part does not depend on the income level.

b) Jerry's consumption equals his income at point A.

At this point, his income = his consumtion = Y₁

c) Along the line segment AC, Jerry's saving is positive.

Along AC, consumption is less than the income. Hence, he can save the rest of his income.

d) Along the segment AB, Jerry's saving is negative.

Along AB, consumption is more than the income level. hence, his savings is negative here.