Explain how the following will affect the consumption and saving.In your answer refer to the diagrams provided as appropriate and identify the correct changein consumption and saving in the figures. (Start from point A in Figure 1 and point A’ inFigure 2).

Explain how the following will affect the consumption and saving.In your answer refer to the diagrams provided as appropriate and identify the correct changein consumption and saving in the figures. (Start from point A in Figure 1 and point A’ inFigure 2).Figure 1 Consumption functionDuring the test, you will be asked this question with a different example.ExampleDue to a decrease in income tax, household incomes increase by $1000 on average.Figure 2 Loanable funds market

Use the information in the table below to answer questions about the economy of Watis. a. Complete the table assuming that the MPC is constant. Remember to enter a minus (−) sign to indicate negative values. Y C S 0 20 25 35 50 47.5 2.5 75 10 100 72.5 20 b. The value of the MPC is and the value of the MPS is . When necessary, enter your answers rounded to 2 decimal places. c. What are the equations for the consumption function and the saving function? C = - (Click to select) S = + (Click to select)

Which of the following best represents the savings function?  Group of answer choicesSavings = Autonomous Consumption + marginal propensity to save x disposable incomeSavings = Autonomous savings + marginal propensity to save x disposable incomeSavings = Autonomous savings+ marginal propensity to consume x disposable incomeSavings = Autonomous Consumption + marginal propensity to consume x disposable income

3) Refer to the figure above, if the country is producing at ________, then moving to ________will cause utility to ________.A) point a; point b; increaseB) point c; point b; increaseC) point c; point b; decreaseD) point b; point c; remain unchangedE) point a; point c; remain unchanged

(b) (10 points) Utilizing the fact that his marginal utility of consumptionmu (c) = 2 c, show that in period 0 his optimal consumption plan(measured in millions of dollars) is(c0; c1; c2) = 87 ; 87 ; 87.(c) (5 points) Explain qualitatively how this optimal plan would changeif the interest rate was greater than 1. Explain qualitatively how thisoptimal plan would change if the interest rate was less than 1.(d) (10 points) If Brian chooses to consume c0 = 8=7 in period 0, explainwhat his intertemporal budget set B1 ((c0; c1; c2)) will be in period 1.Show that the continuation of his original consumption plan (c1; c2) =(8=7; 8=7) is indeed the optimal consumption plan for him to choosein period 1 from this budget set. Explain what property of his choicebehavior does this reáect.