Answer to Question #18371 in Macroeconomics for Brian

Question

Below is the hypothetical statistics for a simple economy in million pounds.
The table gives hypothetical figures for consumption, savings, taxes, imports, investments, government spending and exports at different valves of national income for a simple economy. All the assumptions according to Keysian simple economic model are holding. Marginal propensity to consume is 0.8 marginal propensity to import is 0.2.

Y C S T M I G X TOTAL INJECTIONS TOTAL WITHDRAWAL AGGREGATE DEMAND
10 2 8 4 4
20
30
40
50
60

KEY:
Y: Income M: Imports
C: Consumption I: Investment
S: Savings G: Governmet
T: Tax X: Export
a)
i. Mention only three of the assumptions form the model. (3 marks)
ii. Calculate the marginal propensity to serve for the model. (2 marks)
b) Determine the values for consumption, saving and inputs for each level