Assume that the following is a Consumption schedule

Show all necessary calculations. Be clear and concise in your explanation. Any work that cannot be followed will be given
zero credit. Do not write outside the immediate space provided for each question.
Assume that the following is a Consumption schedule for Economy A:
Income
Consumption
Use this space to show any relevant calculations for
answering #1 below:
0
400
1000
1000
2000
1600
3000
2200 Assume that the following is a Savings schedule for Economy B:
Income
Savings
Use this space to show any relevant calculations for
answering #1 below:
0
-200
1000
0
2000
200
3000
400
1. Assume that there is decrease in the exchange rate of the home currency. In which of the two
economies (Economy A or Economy B {circle your choice}) would such currency devaluation
cause greater impact on the GDP of the home country. Explain your choice using the space
provided below. Economy B above also has the following schedule for AD and AS:
Amount of Real GDP Demanded (trillions)
Price
Index
100
200
300
400
500 3
2.5
2.0
1.5
1.5 Amount of Real
GDP Supplied
(trillions)
400
400
300
200
100 1. What is the equilibrium level of GDP for economy B? Is the equilibrium real output also the fullcapacity real output for economy B? Explain. 2. If economy B is currently operating in equilibrium, by how much would autonomous expenditure
( exp0 ) have to change in order for the economy to reach potential GDP? Show all
calculations. 3. Using AD-AS model and EXP-Y model, graphically illustrate how and in what direction would “a
decrease in the exchange rate of the home currency” affect the equilibrium real GDP of the
home country. Demonstrate your answer on both the “AD-AS graph” as well as the
“EXP-Y graph.” Designate as “a “ the starting point (on both graphs) and show all
“new equilibrium” points as “b”, “c”,
etc. etc. as the economy adjusts to the
devaluation of the home currency. In the space below, explain why the economy
adjusts from “a” to “b” to “c” etc. etc. Use this space to explain why the economy is moving from point a to b to c etc. etc.