Explain Consumption function

it my last course and my grade may effect my GPA
Im looking to have full mark on this assessment

Assessment 1:

Note: This is an individual assessment. Please provide a neat diagram to explain your answer in each question. You are required to answer each question as follows:

1. Give an introduction to the question and explain all key terms
2. Give a graft, label the axes properly and identify all the curves
3. Give a brief description of the changes and outcomes as indicated by the graft.
4. Word limit 1,000

The maximum possible marks to be awarded to you are 30 marks.

Question No. 1

The consumption function may be represented in the following relationship:

Where C: consumption spending

a: autonomous consumption spending

b: MPC

On the graft below, draw the consumption function: C=$20+0.9 (Disposable Income).

Consumption is $billions per year.

Disposable income is $100 billion per year.

Answer the following questions:

• At what level of income do households begin to save? Indicate the point on the graph with the letter A.
• By how much does consumption increase when income rises $150 beyond point A? Indicate this new level of consumption with point B.

 Question No. 2

Defined as the natural rise and fall of a country’s economic growth over time, the business cycle is considered a useful means for analyzing an economy.  In the light of the above statement:

1. explain the different phases of a business cycle
2. explain how both inflation and unemployment contribute to the fluctuation of the business cycle.