Assume, for a hypothetical economy, the following data is given :
Income (Y) Consumption (C) Investment (I) Aggregate Demand (AD) 0 40 20 60 100 120 20 – 200 200 20 – 300 280 20 300
Calculate the missing values in the given schedule.
Assume, for a hypothetical economy, the following data is given :
| Income (Y) | Consumption (C) | Investment (I) | Aggregate Demand (AD) |
|---|---|---|---|
| 0 | 40 | 20 | 60 |
| 100 | 120 | 20 | – |
| 200 | 200 | 20 | – |
| 300 | 280 | 20 | 300 |
Calculate the missing values in the given schedule.
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Solution and Explanation
In a two sector economy, Aggregate Demand is the sum of consumption and investment. So AD = C + I.
We can check this on the given rows first. At Y = 0, C = 40 and I = 20, so AD = 60. At Y = 300, C = 280 and I = 20, so AD = 300. Both match the table.
Step 2: Missing value at Y = 100:
Here C = 120 and I = 20.
\[ AD = C + I = 120 + 20 = 140 \]
Step 3: Missing value at Y = 200:
Here C = 200 and I = 20.
\[ AD = C + I = 200 + 20 = 220 \]
Step 4: Completed schedule:
| Income (Y) | Consumption (C) | Investment (I) | Aggregate Demand (AD = C + I) |
|---|---|---|---|
| 0 | 40 | 20 | 60 |
| 100 | 120 | 20 | 140 |
| 200 | 200 | 20 | 220 |
| 300 | 280 | 20 | 300 |
Final Answer:
The missing values of Aggregate Demand are 140 (at Y = 100) and 220 (at Y = 200).
\[ \boxed{AD = 140 \text{ and } 220} \]
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