Consumption and savings function

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Reference no: EM1314031

Suppose the slope of the consumption function is 0.75 and there was an increase in income of $100. Calculate the increase in consumption.

1. Assume a Consumption function of the form C=200 + 0.8 Y. Derive the saving function and write out the algebraic representation.

2. (i) Fill the table given below.

(ii) Assume MPC is constant. In addition write the algebraic equation for consumption function.

INCOME (IN DOLLARS)	CONSUMPTION (IN DOLLARS)
0	200
100
200
300	425

Reference no: EM1314031

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