Answer to Question #75042 in Macroeconomics for mesh

Question #75042
in a certain economy the marginal propensity to save is 0.2 and the autonomous consumption is 400
a) formulate the consumption functions
b)if the government expenditures were to be increased by 50% what would be the resultant change in national income
1
Expert's answer
2018-03-25T07:08:08-0400
the consumption functions is: C = 400+0,8*(Y-T) , where C - consumption, Y - the income, T - taxes
Y = C + I + G so, if government expenditures were to be increased by 50%, the national income would increase as well.

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