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Part 1: 20 questions worth 3 points each for a total of 60 points.FOR FILL-IN-THE-BLANK questions:If your answer is in decimal form, round to 2 decimal places. For example, if your answer is .412, enter it into the fill-in-the-blank as .41, or if your answer is 1.415, enterit into the fill-in-the-blank as 1.42. If there are no decimals in your answer, you will simply enter the number; so if your answer is 2, enter 2 with no decimals. Do not enter any extra spaces, do not enter commas or $ or % symbols.Question 13 / 3 ptsSuppose the consumption function is: C = a1Yd+ a2WRE/S + a3CC Where all the a’s (the sensitivity parameters) are greater than zero. Initial conditions: Let a1= 0.65, a2= 0.04, a3= 0.5, WRE/S = 18,000: CC= 70 Solve for C in terms of Yd.Select the correct equation.C = 70 + .65 YdNone of these are correctC = 685 + .64 YdCorrect!C = 755 + .65 YdC = 765 + .60 YdQuestion 23 / 3 ptsUse the equation you found in #1 and let Yd= 2000. C is equal to:Correct!Correct Answers2055Question 33 / 3 pts
Suppose that the stock market rallies so that WRE/S increases to 22,000. Additionally, consumer confidence (CC) rises to 120. Re-solve for C in terms of Yd. Select the correct equation.C = 930 + .60 YdCorrect!C = 940 + .65 YdNone of these are correctC = 830 + .65 YdC = 980 + .64 YdQuestion 43 / 3 ptsNow suppose disposable income (Yd) falls due to a tax increase (Uncle Sam is trying to balance the budget) to 1800. Solve for the level of consumption using the equation you found in question #3. Consumption (C) is equal to:Correct!Correct Answers2110Question 53 / 3 ptsNow we will calculate the level of consumption that would have occurred if Uncle Sam did not raise taxes. In other words, use the equation you found in question 3, but keep Ydat its original value of 2000. Consumption (C) is equal to:Correct!Correct Answers2240Question 63 / 3 pts
Look at the consumption values you calculated in #2 and #4. The percent change in consumption between those values is: _________%NOTE:There is no graphing component to be collected for this homework. However, you should be comfortable graphing the equations you found in #1 and #3. You should also be able to plot the points you found in #2, #4 and #5.Correct!Correct Answers2.6802.68NOTE: There is no graphing component to be collected for this homework. However, you should be comfortable graphing the equations you found in #1 and #3. You should also be able to plot the points you found in #2, #4 and #5.Question 73 / 3 pts
Use the table below for questions 7 & 8.Let’s consider some data on consumption and disposable income from the Federal Reserve Database (measured in billions of dollars)Real Personal Consumption ExpendituresReal Disposable Personal IncomeJanuary 1, 19956442.97190.9January 1, 201812061.012940.5The percent change in consumption between 1/1/95 and 1/1/18 is: _______%.