If a consumption function of an economy

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Target Exam

CUET

Subject

Economics

Chapter

Macro Economics: Determination of Income and Employment

Question:

If a consumption function of an economy is given as C = 250 + 0.4Y, then which of the following denotes the saving function of the economy?

Options:

S = -250 + 0.4Y

S = 250 + 0.4Y

S = 250 + 0.6Y

S = -250 + 0.6Y

Correct Answer:

S = -250 + 0.6Y

Explanation:

C = 250 + 0.4Y and saving function is denoted by S = - c̅ + (1 - b)Y thus, the saving function of the above economy will be:

S = -250 + 0.6Y