Problem 103 Algo ADVANCED ANALYSIS Suppose that the linear e

Problem 10-3 (Algo) ADVANCED ANALYSIS Suppose that the linear equation for consumption in a hypothetical economy is C: 60 + 0.9 Y Also suppose that income (M is $600. Determine the following values: nstructions: For parts a, b, d, and f, round your answers to 2 decimal places. For parts cand e, enter your answers as whole numbers. a. MPC- b. MPS C. Consumption- d, APC = e. Saving f, APS =

Solution

A.

MPC = .9

B.

MPS = 1-MPC = 1-.9 = .1

C.

Consumption = 60+.9*600 = $600

D.

APC = consumption / income = 600/600 = 1

E.

Savings = Income – consumptions = 600-600 = 0

F.

APS = 0/600 = 0