The levels of real disposable income and aggregate expenditures for a two-sector economy (consumption and investment) are given in the following table:
Real disposable income (trillions of dollars per year)
0
1
2
3
4
5
6
7
8
Consumption (C) (trillions of dollars per year)
3.00
3.25
3.50
3.75
4.00
4.25
4.50
4.75
5.00
a. Construct a graph of the consumption function (C).
b. Determine the autonomous consumption, MPC, and MPS for this hypothetical economy.
c. What is the break-even income consumption of real disposable income?
d. What is the amount of dissaving at $2 trillion real disposable income and the savings at $7 trillion?