What sort of equation can represent the positive relationship between desired aggregate consumption expenditure (C) and disposable national income (Yd)? A: A straight-line equation would be the simplest form that can maintain acceptable level of generality (without making things too specific): = + > 0 Q:

a. Name the variables in = + . Name the parameters? Interpret the parameters. Which parameter is the slope of the relationship between the two variables? Interpret the slope? Should the slope parameter be in a specific range to be acceptable? Suppose research has determined that = 30 and =0.8. Graph = + for these values of parameters.

c. What is the value of desired consumption expenditure if disposable national income is $1000 billion, given the consumption expenditure function and the values of parameters above? d. What happens to the graph if newer research determines that is actually higher and is equal to 50 and is actually lower and equals to 0.3?

e. Graph = + as is without using any specific numbers for the parameters.

f. How does the graph shift if the slope parameter increases?

g. How does the graph shift if the Y-intercept parameter increases?

h. How much does the desired aggregate consumption expenditure increase if disposable national income increases by $1? Does this help you put an upper bound in the acceptable range for the slope parameter? What should the upper bound be?

Q: What sort of equation can represent the positive relationship between desired aggregate savings expenditure and disposable national income?

A: = + > 0

Q: i. Given that disposable national income can either be consumed or saved, what can we infer about , , , and ?

A: Of disposable national income, what is not spent is saved: = = ( + ) = + (1 ) = & = (1 ) + = 0 & + = 1

j.Graph both the consumption expenditure and savings expenditure functions in the same diagram, paying close attention to the answer to the previous part. Indicate the point at which savings is zero on both graphs. What value does consumption take at this point. k. Given the most recent values for parameters of the desired consumption expenditure function ( = 50 and = 0.3) and given what we inferred about , , , and , derive the desired savings expenditure function

l. Graphically derive the savings graph using the consumption graph and the 45-degree line. (What is the property of every point on the 45o line? When is desired savings expenditure equal zero? Which point in the diagram does represent this situation?)

I need answers for h,I,j,k,l with an explanation, please

i answer is already given but not with a proper explanation, I need to know the explanation for the second part where v= -a and w= 1-b how is this related?

thank you,