1. Assuming the equilibrium condition is Y = C + I. Suppose S = -600 + 0.4Y, and I = 800. If income is presently at $4500 we can say that, ceteris paribus,

a.consumption will decrease.

b.national income is in equilibrium.

c.national income will rise toward equilibrium.

d.national income will decrease toward equilibrium

2.

Consumption per period (trillions of dollars) $6 Consumption 0 1 2 3 4 5 6 7 8 9 10 Real GDP per period = disposable personal income per period (trillions of dollars)AE = Y AEl AED Desired Aggregate Expenditure B A 450 Ya Actual National IncomeGDP Disposable income Consumption Planned Investment (in billions) (in billions) [in billions) [in billions) 5 0 $0 $400 $600 500 500 700 600 1,000 1,000 1,000 600 1,500 1,500 1,300 600 2,000 2,000 1,600 600 2,500 2,500 1,900 600 3,000 3 ,000 2,200 600