Calculate the consumption and Savings function.
Assume the slope of the consumption function is 0.75 and there was an increase in income of $100. Compute 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 |