Macroeconomics Lecture #6 Exercise 1. Write out the consumption function and the saving function represent and identify the y-intercept and slope for each. 2. Graphically illustrate dissaving, saving, and zero saving using both the relation between the consumption function and the 45 degree line and the saving function and the x-axis. 3. Why does the mps = (1-b)? Explain.

4. Graph the investment function and explain its slope. 5. Graph the aggregate spending function (C + I - no government, no foreign trade). 6. In both the Neoclassical model and the Keynesian model, Savings = Investment in equilibrium. Explain how, despite this, the two theories are different from one another in understanding macroeconomic equilibriums.