Question

If C= 500 + 0.75Y

C= consumption and Y= disposable income,

GDP is given as $6000.

GDP= Y

1) Find consumption and savings?

2) If GDP increases by $1000, by how much will consumption increase .........750................... and by how much will savings be.........250..............

3) If GDP = $6000, Find APC and APS?

APC is the average propensity to consume and APS is average propensity to save (APC + APS =1).

APC = Consumption/Disposable income