Posted by **Amber** on Thursday, December 10, 2009 at 2:52pm.

Real Disposable Consumption

Income (billions) Expenditures (billions) Saving (billions)

$100 $150 ______

200 200 ______

300 250 ______

400 300 ______

- macroeconomics -
**economyst**, Thursday, December 10, 2009 at 4:08pm
Savings = income - expenditures. So, for the first example savings =-50

- macroeconomics -
**Amber**, Thursday, December 10, 2009 at 6:44pm
with the answers how would i do this?

a. Graph the consumption function with consumption spending on the

vertical axis and disposable income on the horizontal axis.

b. If the consumption function is a straight line, what is its slope?

c. Fill in the saving column at each level of income. If the saving

function is a straight line, what is its slope?

- macroeconomics -
**economyst**, Friday, December 11, 2009 at 8:54am
a) put income on the x-axis, consumption (and savings) on the y-axis. At x=100 and y=150 put a dot. At x=200 and y=200 put another dot. Repeat for 300 and 400. Connect the dots.

b) slope is rise over run. With each 100 increase in income (run), consumption goes up by 50 (rise). So, 50/100 = .5 = slope

c) repeat for savings

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