65 729
Assignments Done
99,3%
Successfully Done
In October 2018

Answer to Question #54136 in Macroeconomics for paulus

Question #54136
Use the information provided below to construct equations relating consumption and saving to disposable income:

income consumption saving tax
25 million 5 million 15 million 5 million
Expert's answer
The consumption equation is:
C = Ca + c*(Y - T), where C - consumption, c - marginal propensity to consume, Ca - autonomous consumption, Y - income, T - tax.
c = C/Y
C = Ca + 5/25*(25 - 5) = Ca + 0.2*(Y - 5) = Ca - 1 + 0.2Y

Need a fast expert's response?

Submit order

and get a quick answer at the best price

for any assignment or question with DETAILED EXPLANATIONS!

Comments

Assignment Expert
19.08.15, 17:33

Dear visitor, consumption function defined as C = a + b(Y – T), where "a" is an autonomous consumption and "b" is the marginal propensity to consume. Savings function with respect to disposable income is S = -a + (1 – b) (Y – T).

i have no glue
16.08.15, 21:36

maybe Y= I-C-T
y=25-5-15
Y=5

Leave a comment

Ask Your question

Submit
Privacy policy Terms and Conditions