Consider the table below when answering the following questions. For this economy, the marginal propensity to consume is constant at all levels of real GDP, and investment spending is autonomous. Equilibrium real GDP is equal to $8,000. There is no government. Real GDP ConsumptionSavingInvestment $ 2,000 $ 2,000 ____________4,0003,600____________6,0005,200____________8,0006,800____________10,0008,400____________12,00010,000____________ a.Complete the table. What is the marginal propensity to consume? What is the marginal propensity to save? b.Draw a graph of the consumption function. Then add the investment function to obtain C + I. c.Under the graph of C + I, draw another graph showing the saving and investment curves. Does the C+ I curve cross the 45- degree reference line in the upper graph at the same level of real GDP where the saving and investment curves cross in the lower graph, at the equilibrium real GDP of $8,000? (If not, redraw your graphs.) d.What is the average propensity to save at equilibrium real GDP? e.If autonomous consumption were to rise by $100, what would happen to equilibrium real GDP? (Hint: you need to calculate multiplier) Real GDP Consumption Saving Investment $ 2,000 $ 2,000 ______ ______ 4,000 3,600 ______ ______ 6,000 5,200 ______ ______ 8,000 6,800 ______ ______ 10,000 8,400 ______ ______ 12,000 10,000 ______ ______.

1. Consider the table below when answering the following
questions. For this economy, the marginal propensity to consume
is constant at all levels of real GDP, and investment spending is
autonomous. Equilibrium real GDP is equal to $8,000. There is
no government.
Real GDP
Consumption
Saving
Investment
$ 2,000
$ 2,000
______
______
4,000
3,600
______
______
6,000
5,200
______
______
8,000
6,800
______
______
10,000
8,400
______
______
12,000
10,000
______
______
a.Complete the table. What is the marginal propensity to
consume? What is the marginal propensity to save?
b.Draw a graph of the consumption function. Then add the
investment function to
obtain C + I.
c.Under the graph of C + I, draw another graph showing the
saving and investment curves. Does the C+ I curve cross the 45-
degree reference line in the upper graph at the same level of real
GDP where the saving and investment curves cross in the lower
graph, at the equilibrium real GDP of $8,000? (If not, redraw your
graphs.)

2. d.What is the average propensity to save at equilibrium real
GDP?
e.If autonomous consumption were to rise by $100, what would
happen to equilibrium real GDP? (Hint: you need to calculate
multiplier)
Real GDP Consumption Saving Investment
$ 2,000 $ 2,000 ______ ______
4,000 3,600 ______ ______
6,000 5,200 ______ ______
8,000 6,800 ______ ______
10,000 8,400 ______ ______
12,000 10,000 ______ ______