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## Draw the consumption function: C = 150 + 0.8Y D

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**Draw the consumption function:**C = 150 + 0.8YD**Draw the consumption function:**C = 150 + 0.8YD At what level of income do households begin to save? By how much does consumption increase when income rises 200? 750 By 160 to 910**If the consumption function is:**C = 200 + 0.9YD What does the saving function look like? What is the rate of desired saving when disposable income equals 500 1000 2000 S = -200 + 0.1YD -150 -100 0**Compute 4 rounds of multiplier effects when autonomous**investment increases by 100 million in a closed, private economy (no foreign trade nor government) and MPC = 90%.**1,000 million or 1 billion**What will be the final cumulative impact on spending?**Suppose the consumption function is:**C = 400 + 0.8YD By how much will aggregate demand at current prices shift initially with -A 50 billion increase in government purchases? -A 50 billion tax cut -A 50 billion increase in income transfers 50 billion 40 billion 40 billion Multiplier = 1 _ 1-MPC**Suppose the consumption function is:**C = 400 + 0.8YD • What will be the cumulative AD shift for • A 50 billion increase in government purchases? • A 50 billion tax cut • A 50 billion increase in income transfers 250 billion 200 billion 200 billion Multiplier = 1 _ 1-MPC