Question: This question relates to desired saving, and is based on the table in Question 3 . a. Compute desired saving at each level of disposable

This question relates to desired saving, and is based on the table in Question 3 .

a. Compute desired saving at each level of disposable income. Plot the saving function on a scale diagram. What is its slope?

b. Show algebraically that the average propensity to save plus the average propensity to consume must equal 1 .

Data from questions 3 Consider the following table showing aggregate consumption expenditures and disposable income. All values are expressed in billions of constant dollars.

Desired Disposable Consumption MPC Income (Yp) (C) == APC C/YD AC/AYD 0

Desired Disposable Consumption MPC Income (Yp) (C) == APC C/YD AC/AYD 0 150 100 225 200 300 300 375 400 450 500 525 600 600 700 675 800 750

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