PRINCIPLES OF MACROECONOMICSQUIZ #3 – COVERING CHAPTERS 8 AND 9INSTRUCTIONS:Please answer each question to your best ability. Eachquestion requires a short answer. Please answer on a separate sheet ofpaper.When you hand in your quizzes to me, I will hand you the answersheet. You will receive credit for this quiz if I see that a reasonableattempt was made atEACHquestion.1.What is the relationship between consumption and the following economic variables:household income, wealth, household's expectations about the future, and interestrates?2.Draw a graph of the consumption function and explain what the vertical interceptmeans and the slope. Make sure to label both axes.3.Explain any differences between actual investment and planned investment. Also, is itpossible for actual investment to be greater than planned investment? If so, explain.4.Assume consumption is represented by the following: C = 400 + .75Y. Also assumethat planned investment (I) equals 100.