Assuming for a hypothetical economy, the following data is given :
Income (Y) Consumption (C) Investment (I) Aggregate Demand (AD) 0 50 40 90 100 120 40 – 200 190 40 – 300 260 40 300
Calculate the missing values in the given schedule.
Assuming for a hypothetical economy, the following data is given :
| Income (Y) | Consumption (C) | Investment (I) | Aggregate Demand (AD) |
|---|---|---|---|
| 0 | 50 | 40 | 90 |
| 100 | 120 | 40 | – |
| 200 | 190 | 40 | – |
| 300 | 260 | 40 | 300 |
Calculate the missing values in the given schedule.
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Solution and Explanation
Aggregate Demand (AD) is the total planned spending in the economy. In this two-sector data it is the sum of consumption (C) and investment (I).
Step 2: Key formula:
\[ AD = C + I \]
Step 3: Check the formula on the given rows:
At Y = 0, C + I = 50 + 40 = 90. This matches the given AD of 90.
At Y = 300, C + I = 260 + 40 = 300. This matches the given AD of 300.
So the formula fits the data.
Step 4: Missing value at Y = 100:
\[ AD = 120 + 40 = 160 \]
Step 5: Missing value at Y = 200:
\[ AD = 190 + 40 = 230 \]
Step 6: Completed schedule:
| Income (Y) | Consumption (C) | Investment (I) | Aggregate Demand (AD) |
|---|---|---|---|
| 0 | 50 | 40 | 90 |
| 100 | 120 | 40 | 160 |
| 200 | 190 | 40 | 230 |
| 300 | 260 | 40 | 300 |
Final Answer:
The missing values of AD are 160 (at Y = 100) and 230 (at Y = 200). \[ \boxed{160 \text{ and } 230} \]
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