Which of the following is correct as an interpretation of the Keynesian consumption function?Group of answer choicesThe Keynesian consumption function states that as income increases consumption increases more than proportionately.The Keynesian consumption function is consistent with the observation that consumption can increase even if disposable income remains the same.The Keynesian consumption function predicts that if your current income is less than your expected future income, you should borrow today to finance your current consumption needs.The Keynesian consumption function implies that your consumption depends on your overall wealth, rather than your current income.

What does the consumption function describe? Question 7Select one:a.The relationship between consumption expenditures and disposable incomeb.The relationship between total tax and incomec.The relationship between investment expenditures and the rate of interestd.The relationship between quantity demanded and price

In the simple Keynesian model, which of the following statements is false? Group of answer choices An increase in the marginal propensity to save will reduce the level of income in the economy. The reduction in output from an increase in taxation is larger the smaller is the marginal propensity to consume. An increase in lump sum taxation accompanied by an increase in government spending of the same size will increase output. The equilibrium level of output does not depend upon the size of the money multiplier.

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

In the basic Keynesian model, all statements below except for one are true. Which is the incorrect statement? Group of answer choicesPlanned aggregate expenditure is always equal to output in equilibrium. Planned government spending always equals actual government spending.Planned net exports always equal actual net exports.Planned investment always equals actual investment.Planned consumption always equals actual consumption.

In the Keynesian cross, assume the following equation gives the consumption function.𝐶 ൌ 200 ൅ 0.75ሺ𝑌 െ 𝑇ሻPlanned investment is 100, and government purchases and taxes are both 100.(a) Graph planned expenditure as a function of income.(b) What is the equilibrium level of income?(c) If government purchases increase to 125, what is the new equilibrium income?(d) What level of government purchases is needed to achieve an income of 1,600?