Question

Copy and complete this table

Income. C. S. MPS. MPC. APC. APS

0. 400. a. - - b c

1000. d. e. f. 0.6. g. h

1500. I. j. k l. m. 0.89

Answer 1

Income equals consumption plus savings. So at zero income, when consumption is 400, savings equals -400. 

$MPS =\frac{ ∆S}{∆Y}\\ MPC =\frac{ ∆C}{∆Y}\\ MPC +MPS = 1\\ APC =\frac{ C}{I}\\ APS =\frac{ S}{I}\\ APC +APS = 1$

Using these formulas we can complete the table as follows;

$a: 0 - 400= -400\\ b: \frac{C}{I} =\frac{ 400}{0} = infinity\\ c: \frac{S}{I} =\frac{ -400}{0 }= infinity\\ d: MPC × ∆Y = ∆C; 0.6×1000 = 600. Therefore C= 600+400 = 1000\\ e: 1000 - 1000 = 0\\ f: \frac{∆S}{∆Y} =\frac{ 400}{1000} = 0.4\\ g: \frac{C}{I} = \frac{1000}{1000} = 1\\ h:\frac{S}{I} = \frac{0}{1000} = 0\\ j: APS × I = 0.89×1500 = 1335\\ i: 1500-1335 = 165\\ k: \frac{∆S}{∆Y} = \frac{1335}{500} = 2.67\\ l:\frac{ ∆C}{∆Y }= \frac{-835}{500 }= -1.67\\ m: \frac{C}{I} = \frac{165}{1500} = 0.11$