If the consumption function is C = 300 + 0.6Y, then the savings function will be:
Answer & explanation
Correct answer: option 3
We all know that algebraically saving function is written as follows:
S = - c̅ + (1-b)Y
C = 300 + 0.6Y -> Given
According to the question, the savings function will be as follows:
S = (-) 300 + (1 - 0.6)Y
S = (-) 300 + (0.4)Y