T/FIn a two-sector model where Y = C + I, assume that:

S = -$40 + 0.20Yd;

I = $60

Then equilibrium output Y = $450.

T/F In a two-sector model where Y = C + I, assume that:

C = $40 + 0.90Yd;

I = $50;

Y = Yd.

Then equilibrium output Y = $400.

T/F The MPC, or marginal propensity to consume, has a value greater than 0 but less than 1.

Suppose C = $70 +0.75Yd;

I = $65;

Y = Yd.

A. Identify the MPC of the Consumption function.

B. Identify the MPS of the Saving function.

C.Find equilibrium output, Y