RODIL, NIKEESHA ALEXIS E

BSECON 1-2

ACTIVITY

INCOME CONSUMPTION SAVINGS MPS

A 0 200 -200 -
B 100 250 -150 0.50
C 200 300 -100 0.50
D 300 300 0 1
E 400 320 80 0.80
F 500 400 100 0.20
G 600 450 150 0.50

1.Solve for the following:

a.) SAVINGS
A. 0 - 200 = -200 Dissaving
B. 100 - 250 = -150 Dissaving
C. 200 - 300 = -100 Dissaving
D. 300 - 300 = 0 Break-Even
E. 400 - 320 = 80 Positive Savings
F. 500 - 400 = 100 Positive Savings
G. 600 - 450 = 150 Positive Savings
b.) MPS
A. -
B. MPS= ∆S/∆Y = -150 - (-200) / 100 - 0
= 50 / 100
= 0.50

C. MPS= ∆S/∆Y = -100 - (-150) / 200 - 100

= 50 / 100
= 0.50

D. MPS= ∆S/∆Y = 0 - (-100) / 300 - 200

=100 / 100
=1

E. MPS= ∆S/∆Y = 80 - 0 / 400 - 300

= 80 / 100
 = 0.80

F. MPS= ∆S/∆Y = 100 - 80 / 500 - 400

= 20 / 100
= 0.20

G. MPS= ∆S/∆Y = 150 - 100 / 600 - 500

= 50 / 100
= 0.50

2.Write the savings function from the given income and savings schedule.
B. Income = 100
Savings = -150
MPS (slope) = 0.50
S= -a + 1 - b(Y)
-150 = -a + 1 - (0.50)(100)
-150 = -a + 1 - 50
-150 = -a -49
-150 + 49 = -a
-101 = -a
To check the value:
-150 = -101 + 1 - (0.50)(100)
-150 = -101 + 1 -50
-150 = -101 - 49
-150 = -150
Savings function:
S= -101+ 1 -(0.50)Y

C. Income = 200
Savings = -100
MPS (slope) = 0.50
S = -a + 1 - b(Y)
-100 = -a +1 - (0.50)(200)
-100 = -a + 1 - 100
-100 = -a -99
-100 + 99 = -a
-1 = -a
To check the value:
-100 = -1 +1 - (0.50)(200)
-100 = -1 +1 -100
-100 = -1 -99
-100 = -100
Savings function:
S=-1 +1 -(0.50)Y
D. Income = 300
Savings = 0
MPS (slope) = 0
S = -a + 1 - b(Y)
0 = -a +1 - (1)(300)
0= -a +1 -300
0 = -a -299
0 + 299 = -a
299 = -a
To check the value:
0 = 299 +1 - (1)(300)
0 = 299 + 1 - (1)(300)
0 = 299 + 1 -300
0 = 299 -299
0=0
Savings function:
S = 299 + 1 - (1) Y

E. Income = 400
Savings = 80
MPS (slope) = 0.80
S = -a + 1 - b(Y)
80 = -a +1 - (0.80)(400)
80 = -a + 1 -320
80= -a -319
80 + 319 = -a
399 = -a
To check the value:
80 = 399 +1 - (0.80)(400)
80 = 399 + 1 - 320
80 = 399 - 319
80 = 80
Savings Function:
S = -a +1 - (0.80)Y

F. Income = 500
Savings = 100
MPS (slope) = 0.20
S = -a + 1 - b(Y)
100 = -a + 1 - (0.20)(500)
100 = -a + 1 - 100
 100 = -a -99
100 + 99 = -a
199 = -a
To check the value:
100 = 199 + 1 - (0.20)(500)
100= 199 + 1 -100
100 = 199 -99
100 = 100
Savings function:
S = 199 + 1 - (0.20)Y

G. Income = 600
Savings = 150
MPS (slope) = 0.50
S = -a + 1 - b(Y)
150 = -a + 1 - (0.50)(600)
150 = -a + 1 -300
150 = -a -299
150 + 299 = -a
449 = -a
To check the value:
150 = 449 + 1 - (0.50)(600)
150 = 449 + 1 -300
150 = 449 -299
150 = 150
Savings function:
S = 449 + 1 - (0.50)Y