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In a simple economy (assume there are no taxes; thus, Y is disposable income), the consumption function is:
C=500+0.80Y
The current level of real GDP is $6000
At this level of real GDP, consumption will be $____ and savings will
be $___ if GDP were to increase by $1000 consumption would increase by
$_____ (Round your responses to the nearest dollar)
At a real GDP level of $6000, the average propensity to consume is
____ and the average propensity to save is ___. (Round your answers to
two decimal to two decimal places.)
