The figure shows consumption function C = 50 + 0.8y, the investment function I = 150, the aggregate spending function A = 200 + 0.8y and the equilibrium condition Y = A. The equilibrium level of income is determined by the intersection of the A curve and the 45 degree line at Point E. The equilibrium level of income in this case is therefore 1000. At levels of Y lower than 1000 there is excess demand and at levels of Y higher than 1000 there is excess supply.

3.11. Which of the following statements is correct?

1. [1] The value of autonomous investment is not provided
2. [2] The value of autonomous consumption is not provided
3. [3] The MPC is 50
4. [4] Autonomous investment is 150
5. [5] The 45-degree line should always be shown as a dotted line

3.12. Which of the following statements is correct?

1. [1] MPC is 1/4
2. [2] MPC is 5/4
3. [3] MPS is 1-1/4
4. [4] MPC is 4/5
5. [5] MPC cannot be calculated from the given information

3.13. Which of the following statements is correct?

1. [1] Equilibrium income is where point E is indicated
2. [2] Equilibrium income is where A = 200 + 0.8 Y
3. [3] Equilibrium income is where C = 50 + 0.8Y
4. [4] Equilibrium income cannot be calculated without information on savings
5. [5] Equilibrium income is where I equals A

3.14. The multiplier is …

1. [1] 5.
2. [2] 0.8.
3. [3] 1/5.
4. [4] 1-4/5.
5. [5] not able to be calculated from the information provided in the figure.