Final answer:
The consumption function is C = $800 billion + 0.8Y. The MPC is 0.8 and the autonomous consumption is $800 billion. Consumers would spend $3.2 trillion with incomes of $4 trillion and save $0.8 trillion.
Step-by-step explanation:
The consumption function can be represented as C = $800 billion + 0.8Y.
a) The MPC, or marginal propensity to consume, is the slope of the consumption function. In this case, the MPC is 0.8.
b) Autonomous consumption refers to the consumption that happens even when income is zero. In this case, autonomous consumption is $800 billion.
c) To find out how much consumers spend with incomes of $4 trillion, we can substitute Y=$4 trillion into the consumption function. This results in C = $800 billion + 0.8($4 trillion) = $3.2 trillion.
d) To find out how much consumers save, we can subtract the amount spent from the income. In this case, the amount saved is $4 trillion - $3.2 trillion = $0.8 trillion.