1. Defines: consumption function; savings function; 45 line; autonomous consumption, dissavings, LDC, PMC; discretionary and automatic fiscal policy; pol. Expansionary fiscal and its effect on aggregate demand or GDP; restrictive fiscal policy and its effect on aggregate demand or GDP; expenditure multiplier; tax multiplier.

1. Then the consumption function for an economy (in trillions of $). How to calculate the level of savings, the PMC and the WFP.

Disposable income	Consumption	Saving	PMC	PMA
2.5	2.7
3.5	3.5
4.5	4.3
5.5	5.1
6.5	5.9
7.5	6.7
8.5	7.5
9.5	8.3
10.5	9.1

1. If the equilibrium GDP is $2.8 trillion and the potential GDP is $30.0 trillion. The PMC is . 75.
2. Determine the type of gap that exists.
3. Determines the expense multiplier.
4. It determines the necessary change in public spending to close the gap.
5. Determine the tax multiplier and how much taxes should change to close the gap.

4. Mention the determinants of Aggregate Demand and those of Aggregate Supply.