Break-even level of income, Macroeconomics

Assume that when an economy has a GDP of $500, Consumption is $550. The MPC is .75. Investment is 25. Begin the problem by setting up an Income/Consumption Schedule like the one on page 190 of your text. Set up only the first two columns (1) and (2).

            Level of          

            Output            

            And

            Income            consumption

            (GDP=DI)                     ( C )

            $500                $550

1. Graph the Consumption Function.

2. Add Investment to the graph.

3. What is the multiplier?

4. What is the Break-Even level of Income? (Do not include Investment)

5. What is the Equilibrium level of Income? (Include Investment)

6. What would be the new equilibrium in this economy if Investment increased by $12?

Posted Date: 2/23/2013 6:51:39 AM | Location : United States







Related Discussions:- Break-even level of income, Assignment Help, Ask Question on Break-even level of income, Get Answer, Expert's Help, Break-even level of income Discussions

Write discussion on Break-even level of income
Your posts are moderated
Related Questions
2. Given the following information: Consumers are very optimistic about the future. The price of oil has just doubled. The money supply is growing at a 6% rate. The government has


The aim of this task is to explore the effects of a supply shock on a firm and thereby on the industry. Suppose that war breaks out in the Middle East, where a considerable portion

Discuss about the Keynesian economists The Keynesian economist A. W. Phillips developed short-run Phillips curve analysis in the 1950s. Phillips had researched the relationshi

Was money a better store of value in the United States in the 1950s than it was in the 1970s? Why or why not? In which period would you have been willing to hold money? Which one w

Q. Define Exchange rate systems? Different nations have different exchange rate systems. The most significant characteristic of an exchange rate system is to what degree the co

The below diagram demonstrates how all the variables are determined in classical model:  Figure: Determination of all the variables in the classical model a) Start at

Q. Describe about Components of GDP? By considering all arrows to and from the goods market we see that Y + I m = C + I + G + X. Left hand side is the value of all finishe

Inflation in Germany Once we have monthly data on a price index we can calculate inflation. In most nations, the percentage change in price index during one month is small. So,

To determine whether high blood pressure affected whether a person had a stroke, a sample of 300 people who had had strokes are examined. In the sample, 37% had high blood pressure