Connect Problem CP 1012 algo Real GDP consumption and the ma

Connect Problem CP 10-12 (algo) Real GDP, consumption, and the marginal propensity to consume (MPC) for five hypothetical countries are shown in the table below a. Enter the current level of saving in the appropriate column in the table b. Now suppose that GDP increases by $20 billion in each of the five countries. What would be the new level level of saving in each country? Show your answers in the table below Instructions: Enter your answers as whole numbers. If you are entering any negative numbers be sure to include a negative sign(-) in front of those numbers. Current Level of Saving Billions) New Level of Saving (Billions) Real GDP Consumption Country(Billions) ( $50 60 80 120 220 (Billions) 534 50 92 120 236 MPC 0.75 0.8 0.9 0.95 0.8

Solution

a.

Country

Real GDP(Billions)

MPC

MPS

Current level of saving

A

50

0.75

0.25

12.5

B

60

0.8

0.2

12.0

C

80

0.9

0.1

8.0

D

120

0.95

0.05

6.0

E

220

0.8

0.2

44.0

b.

Country

Real GDP(Billions)

MPC

MPS

New level of saving(Billions)

A

70

0.75

0.25

17.5

B

80

0.8

0.2

16.0

C

100

0.9

0.1

10.0

D

140

0.95

0.05

7.0

E

240

0.8

0.2

48.0

Country	Real GDP(Billions)	MPC	MPS	Current level of saving
A	50	0.75	0.25	12.5
B	60	0.8	0.2	12.0
C	80	0.9	0.1	8.0
D	120	0.95	0.05	6.0
E	220	0.8	0.2	44.0