(Solved): 1. Graphing the consumption function from the MPC Consider a hypothetical economy in which the marg ...

1. Graphing the consumption function from the MPC Consider a hypothetical economy in which the marginal propensity to consume (MPC) is \( 0.75 \). That is, if disposable income increases by 51 , consumption increases by 754 . Suppose further that last year disposabie income in the economy was \( \$ 300 \) billilon and consumption was \( \$ 250 \) billion. On the following graph, use the blue line (circle symbol) to plot this economy's consumption function based on these data. From the preceding data, you know that the level of savings in the economy last year was billion and thig marginal propensity to save in this economy is Suppose that this year, disposable income is projected to be \( \$ 500 \) bllilion, Based on your analyzis, you would expect consumpelian to be bilion and savings to be billion.