Question: 3. On the accompanying graph, draw the consumption function C = $100 + 0.8 YD . (a) At what level of income do households begin

3. On the accompanying graph, draw the consumption function C = $100 + 0.8 YD .

(a) At what level of income do households begin to save?

Designate that point on the graph with the letter A.

(b) By how much does consumption increase when income rises $200 beyond point A?

Designate this new level of consumption with point B.

(c) Illustrate the impact on consumption of the change in consumer confidence described in the News on page 185.

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