What effect on saving of one dollar change in total income, Macroeconomics

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What effect on saving of one dollar change in total income

Problem

Suppose the consumption function is given by C = a + bY_d where a and b are constants (b is the marginal propensity to consume), and Yd is disposable income, equal to Y - T. Taxes vary with income and are equal to t₀ + tY where t₀and t are constants (t is the marginal tax rate).

(a) What is the effect on consumption of a $1 change in total income?

(b) What is the effect on saving of a $1 change in total income?

The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.

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Macroeconomics: What effect on saving of one dollar change in total income

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