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Measures of Output, Prices, and Employment

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1. Suppose, in a two-sector model, that individuals receive the following payments from the business sector: wages $520, interest $30 rent $ 10 and profits $80. Consumption spending is $550 and investment is $90.
a. Find the market value of output and household saving
b. What is the relationship of saving and investment?

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Solution Summary

The expert determines the relationship between saving and investment.

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a) the market value of final output is $640, found by adding wages of $520 + interest of $30 + rent of ...

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