7. The consumption function

Consider a country with the national income of $32 billion, the amount of taxes paid by households of $12 billion, and household consumption of $16 billion. Suppose that the marginal propensity to consume (MPC) is 0.7.

On the following graph, use the blue line (circle symbol) to plot the economy's consumption function.

Note: Select and drag the line segment from the palette to the graph. Then select a point on the line segment and drag it to its desired position.

On the following graph, use the blue line (circle symbol) to plot the economy's consumption function. Note: Select and drag the line segment from the palette to the graph. Then select a point on the line segment and drag it to its desired position. 50 O 45 40 Consumption Function 35 30 25 CONSUMPTION (Billions of dollars) 20 15 10 O 5 10 15 20 30 35 40 45 50 DISPOSABLE INCOME (Billions of dollars)