If the consumption function is C = $400 billion + 0.8Y

a) what is the MPC?

b) how large is autonomous C? 400 billion

c) how much do consumers spend with incomes of $4 trillion?

d) how much do they save?

C = 400 billion + 0.8Y

a) MPC = 0.8

b) autonomous C = 400 billion

c) C = 400 billion + 0.8y = 400 billiob + (0.8 * 4 trillion) = 3.6 trillion

d) S = - 400 billion + 0.2 (4 trillion) = - 400 billion + 800 billion = 400 billion