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Consider an economy where autonomous consumption is $140 billion and where 90% every additional dollar of disposable income is spent on consumer goods. a. Write
Consider an economy where autonomous consumption is $140 billion and where 90% every additional dollar of disposable income is spent on consumer goods. a. Write down the consumption function for this economy (use " 140 " for " $140 billion".don't write down all the zeroes). b. Calculate the break-even level of disposable income. c. Calculate the increase in the level of consumption that would be caused by a $30 billion increase in disposable income (starting at any level of Yd ). d. Graph the consumption function and the saving function for this economy, showing clearly the intercepts and the break-even level of disposable income. e. Suppose that currently Yd=$1,500 billion. Explain what would happen to consumption and saving if disposable income increased to $1,600. Show clearly in your graph the initial situation and the situation after the increase in Yd. f. Go back to Yd=$1,500 billion. Explain clearly what would happen to consumption and saving if the price level decreased. Redraw your consumption and saving functions and show in your graph the effect of the change in the price level. Consider an economy where autonomous consumption is $140 billion and where 90% every additional dollar of disposable income is spent on consumer goods. a. Write down the consumption function for this economy (use " 140 " for " $140 billion".don't write down all the zeroes). b. Calculate the break-even level of disposable income. c. Calculate the increase in the level of consumption that would be caused by a $30 billion increase in disposable income (starting at any level of Yd ). d. Graph the consumption function and the saving function for this economy, showing clearly the intercepts and the break-even level of disposable income. e. Suppose that currently Yd=$1,500 billion. Explain what would happen to consumption and saving if disposable income increased to $1,600. Show clearly in your graph the initial situation and the situation after the increase in Yd. f. Go back to Yd=$1,500 billion. Explain clearly what would happen to consumption and saving if the price level decreased. Redraw your consumption and saving functions and show in your graph the effect of the change in the price level
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