Plot both consumption and savings relationships on one grid with consumption andsavingshownontheverticalaxisanddisposableincomeonthehorizontalaxis.Usingtheproperty ofthe 45^oline,explainand indicatewhere savings would be zero.

Assuming that the desired aggregate expenditure is defined as the sum of desiredconsumption and investment expenditures in the absence of a government and foreigntrade (AE = C + I). Let's assume that desired investment expenditures (I) is autonomousand fixed at $30 billion. First, given the absence of a government sector to tax economicactivity and pay households via transfer payments, what can be said about aggregateactualdisposableincome and actualnationalincome?

Considering your answers so far, write down the system of equations that define thismacro economy? How many unknowns and equations are this system composed of?Whatistheequilibriumcondition thatdefinestheequilibriumactualnationalincome?

Consideringyouranswer topartk,replacetheequationsyouhaveforthecomponentsofAEinto its defining expressiongiventoyou above.Interpretthisequation.

Given youranswertotheprevious part, whatisthesizeofthemarginal propensitytospend?Interpret it.

Solve for equilibrium national income and indicate here every step you take. What are theequilibriumlevelsofdesiredconsumption andinvestment expenditures?

Putting actual income on the horizontal axis, precisely plot consumption and investmentcurves in a graph, and graphically derive the AE curve on the same plot. How can theequilibriumconditionbeshown onthisplot?Clearlyshowtheequilibriumpointandtheequilibriumnational income.