3. Consider the following consumption function: C = 200+ 0.75(Y). Here C is consumption, autonomous spending is 200, the MPC is 0.75, and disposable income is Y-T=YD. a. Construct a Keynesian Cross Diagram, graphing the consumption function. b. Determine and graph the level of equilibrium income. c. What happens if autonomous spending increases to 300? Show on your graph and solve for the new equilibrium income.

3. Consider the following consumption function: C = 200+ 0.75(Y). Here C is consumption, autonomous spending is 200, the MPC is 0.75, and disposable income is Y-T=YD. a. Construct a Keynesian Cross Diagram, graphing the consumption function. b. Determine and graph the level of equilibrium income. c. What happens if autonomous spending increases to 300? Show on your graph and solve for the new equilibrium income.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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