| Macroeconomic Analysis |
| Consumption Functions |
| Saving Functions |
| 1. Suppose household consumption C is: |
| C=$50 + 0.80Yd |
| And investment, I is: |
| I = $40 |
| A. Find equilibrium output, Y. |
| B. Find the value of C at the equilibrium output. |
| C. Graph the Consumption function on Excel. |
| 2. Suppose C = $60 +0.80Yd; |
| I = $50; |
| Y = Yd. |
| A. Find the saving function. |
| B. Find equilibrium output, Y. |
| C. Graph the Consumption function on Excel. |
| D. Graph the Saving function on Excel. |
| E. Determine the equilibrium of the Consumption function and Saving function by graphing the functions. |
| 3. Suppose C = $70 +0.75Yd; |
| I = $65; |
| Y = Yd. |
| A. Identify the MPC of the Consumption function. |
| B. Identify the MPS of the Saving function. |
| C. Find equilibrium output, Y. |
| 4. Suppose C = $40 + 0.75Y; |
| I = $60; |
| Y =Yd. |
| A. Find equilibrium output, and equilibrium of Consumption and Saving functions. |
| B. Graph the Consumption and Saving functions on Excel. |
| C. Show that spending = output by using: Y =C + I. |
| 5. Suppose the Consumption function, C =$60 + 0.80Yd; |
| I =$70; |
| Y = Yd. |
| A. What happens to the equilibrium output, Y when I increase to $80. |
| B. Calculate the new value of Y when I = $80. |
| C. What happens to equilibrium output, Y when I decrease to $50? |
| D. Calculate the new value of Y when I = $50. |
| 6. T/F In a two-sector model where Y = C + I, assume that: |
| S = -$40 + 0.20Yd; |
| I = $60 |
| Then equilibrium output Y = $450. |
| 7. T/F In a two-sector model where Y = C + I, assume that: |
| C = $40 + 0.90Yd; |
| I = $50; |
| Y = Yd. |
| Then equilibrium output Y = $400. |
| 8. T/F The MPC, or marginal propensity to consume, has a value greater than 0 but less than 1. |
| 9. Suppose the Consumption function, C = $30 + 0.80Yd; |
| I = $60; |
| Y = Yd. |
| A. Find how much money is spent on C when Y = $650. |
| B. How much Saving is there when Y = $650? |
| C. Graph the Consumption and Saving equilibrium. |
| 10. Suppose that the Consumption function, C =$30 + 0.80Yd; |
| I = $50; |
| Y = Yd. |
| A. What happens to equilibrium output when the MPC changes to 0.90? |
| B. Graph C = $30 + 0.80Yd and C = $30 + 0.90Yd. What do you notice? |
| C. Find the Saving function when MPC = 0.80 and MPS = 0.20. |
abdussamet akca
ECOMACROConsumptionandSavingsFunctions10Q20201.xlsx
