Chapter 4_16 April 2024

Derive the consumption function given

S= -60 + 0.4Yd

(a)  

Derive the saving function given

C= 100 + 0.7Yd

(a)  

Consumption function written as

C= a + bYd. What is b

• consumption expenditure

• autonomous consumption

• marginal propensity to consume

• disposable income

Choose the correct answer that describes disposable income (Yd)

• Yd = Y - S

• Yd = Y - T

• Yd = Y- C

• Yd = Y -b

Choose the correct answer for equilibrium in a three-sector economy

• AE = C + I + G

• AE = C+ I

• AE = C + I + G + X-M