Question

Calculate the answer to each of the blanks in the table below. (I've listed the blanks with letters, so that you know which question it applies to).

Income . Consumption . Saving                         MPC                        MPS .

0 . _____(A)___ -200                            

500 500 ___(B)____ __(F)_____            __(G)_____

____(C)____ 800                       200

1,500 . 1,100                ____(D)____  

2,000 . ____(E)____ 600   

What are the values of A, B, C, D, E, F and G?

Answer 1

Income	Consumption	Saving	MPC	MPS
0	A	-200
500	500	B	F	G
C	800	200
1500	1100	D
2000	E	600

Income = Consumption + Saving.

------------------------------------------------------------------------------------------------------

Finding value of A

Income = Consumption + Saving.

0 = Consumption + (-200)

Consumption = 200

Value of A is 200

------------------------------------------------------------------------------------------------------

Finding value of B

Income = Consumption + Saving.

500 = 500 + Saving

Saving = 0

Value of B is 0

------------------------------------------------------------------------------------------------------

Finding value of C

Income = Consumption + Saving.

Income = 800 + 200

Income = 1000

Value of C is 1000

------------------------------------------------------------------------------------------------------

Finding value of D

Income = Consumption + Saving.

1500 = 1100+ saving

Saving = 400

Value of D is 400

------------------------------------------------------------------------------------------------------

Finding value of E

Income = Consumption + Saving.

2000 = Consumption + 600

Consumption = 1400

Value of E is 1400

------------------------------------------------------------------------------------------------------

Finding value of F

MPC = Change in Consumption / Change in Income

MPC = (500 - 200) / (500 - 0)

MPC = 300 / 500

MPC = 0.6

Value of F is 0.6

------------------------------------------------------------------------------------------------------

Finding value of G

MPS + MPC = 1

MPS = 1 - MPC

MPS = 1 - 0.6

MPS = 0.4

or, MPS = (Change in Savings / Change in Income)

MPS = (0 - (-200)) / (500 - 0)

MPS = 200 / 500

MPS = 0.4

Value of G is 0.4