Economics
CSU Consumption Function & Consumption Spending in A Straight Line Discussion

Columbia Southern University

### Question Description

I’m studying for my Economics class and need an explanation.

Sheet with the questions have been attached, as well as a guide. There is 6 questions total, some may contain multiple parts within the same question. One of the questions will be in bold. It is 10-2, Question 3. That one has a graph which has been attached to this document as well.

All sources used, including the textbook, must be referenced; paraphrased and quoted material must have accompanying citations. All references and citations used must be in APA style.

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Attached.

9-1
1. (Consumption) Use the following data to answer the questions below:
Consumption Real
Disposable Income (Billions)
\$100
\$200
\$300
\$400

Expenditures
(Billions)
\$150
\$200
\$250
\$300

Saving
(Billions)
\$____________
\$____________
\$____________
\$____________

(A). Graph the consumption function, with consumption spending on the vertical axis and
disposable income on the horizontal axis.

Consumptioon
Expenditure(billions)

Consumption Function
400
300
200
100
0
0

100

200

300

400

500

Real Disposable Income(billions)

(B). If the consumption function is a straight line, what is its slope?
Using two point formula,
Slope of consumption function = (200-150)/ (200-100) =1/2
(C). Fill in the saving column at each level of income. If the saving function is a straight line,
what is its slope?

Saving(billions)

Savings Function
200
100

0
-100

0

100

200

300

Real Disposable ...

Lessermaster (17344)
UC Berkeley
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