Consider the variables income, consumption, and investment. One relationship among them is relatively stable, the other quite volatile. Discuss.
Answer to relevant QuestionsCalculate the marginal propensity to consume, the marginal propensity to save, and the level of saving for each income level in the accompanying table. For each of the three income levels shown, pro vide appropriate data to satisfy or be consistent with the absolute and relative income hypotheses. What happens to the level of national income when intended investment is greater than saving? Fill in the missing cells in the following table. Draw graphs showing recessionary and inflationary gaps and explain how these gaps emerge.
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