# The figure shows consumption function C = 50 + 0.8y, the investment function I = 150, the aggregate spending function A = 200 + 0.8y and the…

The figure shows consumption function C = 50 + 0.8y, the investment function I = 150, the aggregate spending function A = 200 + 0.8y and the equilibrium condition Y = A. The equilibrium level of income is determined by the intersection of the A curve and the 45 degree line at Point E. The equilibrium level of income in this case is therefore 1000. At levels of Y lower than 1000 there is excess demand and at levels of Y higher than 1000 there is excess supply.

3.11. Which of the following statements is correct?

1.  The value of autonomous investment is not provided
2.  The value of autonomous consumption is not provided
3.  The MPC is 50
4.  Autonomous investment is 150
5.  The 45-degree line should always be shown as a dotted line

3.12. Which of the following statements is correct?

1.  MPC is 1/4
2.  MPC is 5/4
3.  MPS is 1-1/4
4.  MPC is 4/5
5.  MPC cannot be calculated from the given information

3.13. Which of the following statements is correct?

1.  Equilibrium income is where point E is indicated
2.  Equilibrium income is where A = 200 + 0.8 Y
3.  Equilibrium income is where C = 50 + 0.8Y
4.  Equilibrium income cannot be calculated without information on savings
5.  Equilibrium income is where I equals A

3.14. The multiplier is …

1.  5.
2.  0.8.
3.  1/5.
4.  1-4/5.
5.  not able to be calculated from the information provided in the figure.