If the autonomous consumption is given as 100 and the tendency of the people to increase consumption for an increase in income is only 20%, then derive the savings function.

S = -100 + 0.8 Y   

We all know that algebraically saving function is written as follows:

S = - c̅ + (1-b)Y

C = 100 + 0.2Y -> Given

(As autonomous consumption is given as 100 and MPC i.e. increased consumption for an increase in income is given 20%)

Therefore, according to the question, the savings function will be as follows:

S = (-) 100 + (1 - 0.2)Y

S = (-) 100 + (0.8)Y