Question

givenC=40+0.8y.find
(a) dissaving
(b)MPS
(c)K
(d)APCgiven that income level is4000
​

Answer 1

Answer:

dis savings is 40 because it is autonomous consumption

mps is 1- mpc=0.2

k=1/mps=5

apc c/y

Answer 2

Given:

C=40+0.8y

To find:

(a) dissaving

(b)MPS

(c)K

(d)APCgiven that income level is4000

​

Solution:

From given, we have,

Income Y = 4000

C = 40 + 0.8Y

(a) dissaving

dis saving is 40 (given is an autonomous consumption)

(b)MPS

MPS = 1 - MPC = 1 - 0.8 = 0.2

OR

Savings (S) = Income (Y) - Consumption (C)

S = Y - C

S = Y - (40 + 0.8Y)

S = Y - 40 - 0.8 Y

S = -40 + 0.2 Y

from above equation, we get, MPS = 0.2

(c)K

K = 1/MPS = 1/0.2 = 5

(d)APCgiven that income level is4000

APC = C/Y

= (40 + 0.8Y) / Y

= (40 + 0.8×4000) / 4000

= 3240/4000

= 0.8