Problem 1: Suppose that the linear equation for consumption in a hypothetical economy is C = 50 + 0.9 Y. Also suppose that income (Y) is $400. Determine the following: (a) MPC; (b) MPS; (c) level of consumption; (d) APC; (e) APS
Problem 2: List and explain four factors that could shift the current consumption schedule.
Problem 3: State and elaborate on the factors that explain why investment spending tends to be unstable.