II. Suppose consumption function that relates aggregate consumption spending to the changes in aggregate disposable income of households (that is their after-tax income) in the economy can be represented in the form of the following table (all the figures are in money units, $): Aggregate disposable income (YD) 400 450 500 550 600 Aggregate consumption spending (C) 370 410 450 490 530 Define the endogenous variable and the exogenous variable in this model. Explain your answer. a) Explain the type of the relation of aggregate consumption spending from aggregate disposable income, and write this relation: (i) as a function (in the general form); (ii) as an equation (in the general form) and explain the components of this equation; derive the equation of the consumption function for this economy; (iii) plot the graph of the consumption function for this economy, labelling the axes and lines, and putting figures, including the slopes of the lines. (b) Suppose disposable income YD grows from $650 until $700. Compute the change in the level of consumption spending. Show the changes on your graph from point (a), putting new figures. (c) Suppose now the interest rate on consumer loans goes up in this economy that causes autonomous consumption to change for $20. Derive the new equation for the consumption function. Compute the new values of consumption spending under both levels of the disposable income of $650 and of $700. Redraw the graph from point (b) and show the changes, putting new figures. (d) Now suppose that in the initial situation of point (b) the sensitivity of consumption spending to the changes of the disposable income becomes 0.9. Derive the new equation of the consumption function. Compute the new values of consumption spending under both levels of the disposable income of $650 and of $700. Redraw the graph from point (b) and show the changes, putting new figures