Fill in the table below to answer these questions (see Table 9–2 for guidance).

Table 9-2:

a. What is the equilibrium level of income?

b. What is the MPC ? The MPS?

c. If $10,000 of goods are produced (that is, if Q = $10,000), what will happen to inventories? What is actual investment? How is actual investment related to desired investment and savings?

d. Answer (c) again for Q = $15,000.

e. If desired investment spending goes up by $200 (to $2,200), how much will equilibrium income go up? What is the multiplier?

f. If, instead, at all levels of Q, consumption spending goes up by $200, how much will equilibrium income go up? What is the multiplier?

g. How much will consumption spending go up?

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Table 9-2. Reaching Equilibrium in Aggregate Demand C D(C+1) Q or DI Income $ 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 11,000 $ 750 1,500 2,250 3,000 3,750 4,500 5,250 6,000 I 6,750 7,500 8,250 $1,500 1,500 1,500 1,500 $2,250 3,000 3,750 4,500 5,250 6,000 6,750 7,500 8,250 9,000 9,750 Change in Output Inventories (Q- Response by Businesses D) -$1,250 - 1,000 - 750 - 500 - 250 Increase Increase Increase Increase Increase NO CHANGE Decrease Decrease Decrease Decrease Decrease 1,500 1,500 0 1,500 + 250 1,500 + 500 1,500 + 750 1,500 + 1,000 1,500 + 1,250 C = Consumption DI = Disposable Income / = Investment D = Spending Q = Income