Answer to Question #123479 in Macroeconomics for C. Pratibhu

Question

A) C= 10+0.90Y , I=60. How will APS and MPS change as income changes? Is actual I= planned I at Y=850?

Answer 1

The more income the less AMP and as income increase the AMP tends to 0.9. MPS does not change as income changes.

$Y=C+I$

$850=10+0.9*850+I$

$I=75$ - not. Actual I(75) is not equal planned I (60)