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A8. FIGURE A Aggregate Expenditure Function 45Iine Desired Aggregate Expenditure O 300 600 900 1,200 1.500 1 .800 Actual National Income Refer to Figure A.
A8. FIGURE A Aggregate Expenditure Function 45Iine Desired Aggregate Expenditure O 300 600 900 1,200 1.500 1 .800 Actual National Income Refer to Figure A. Jonathan mistakenly says that the above graph is an example of a Keynesian linear consumption function. What can you correctly tell him about the consumption function, in terms of his economy's desired consumption expenditure? A. Partially induced by decreases in the average propensity to save [APS). B. Largely determined autonomously by factors other than real income. C. A function of disposable income over a lifetime rather than the current period. D. An increasing proportion of disposable income against individual consumption. E. None of the above [it seems you can't explain to Jonathan a correct statement about consumption expenditures either!)
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