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Using the equation( C= a + bY) where Y= GDP    =    C= 100 + .8Y Fill...

Using the equation( C= a + bY) where Y= GDP    =    C= 100 + .8Y

Fill out the table below

___________________________________________________________________________

GDP Consumption                   Savings

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Using graph paper plot the function C= 100+ .8Y (see figure 12-3 and 12-4 and 12-6). You should plot both axis in the same denomination (if one square= 100 on the vertical, 1 square will also equal 100 on horizontal axis). Include a 45 degree reference line showing equilibrium between the vertical and horizontal axis. The consumption function will cross the 45 degree line at equilibrium.

At the bottom of the graph, plot the savings function.

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Answer #1
GDP (Y) Consumption (C= 100 + .8Y) Saving = Y - C
0 100 -100
100 180 -80
200 260 -60
300 340 -40
400 420 -20
500 500 0
600 580 20
700 660 40
800 740 60

700 500 300 n200 -45 degree line 100 φ 0 300 400 500 600 700 800 900 100 GDP

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