Question: (25 points) Suppose we have a Keynesian consumption function where autonomous consumption is $600 and the marginal propensity to consume is 0.60. a. (5 points)


(25 points) Suppose we have a Keynesian consumption function where autonomous consumption is $600 and the marginal propensity to consume is 0.60. a. (5 points) Write an algebraic expression for the consumption equation. b. (5 points) Sketch a graph of this consumption curve that corresponds to the consumption equation above. Include the income line in your drawing and label autonomous consumption. c. (5 points) Calculate the level of income at which income is equal to consumption, that is, where the consumption curve intersects the income line. d. (5 points) Using the consumption equation from point (a), what is the MP5 for the corresponding saving curve? e. (5 points) At what level of income will saving be zero? (Hint: What is the level of income where consumption is equal to income?) Use this point and the MP5 to sketch the saving curve in a graph
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