Consumer assumption and savings schedules

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Reference no: EM131392101

Linear equation for the consumer assumption and savings schedules takes the general form C=a+bY and S = -a+ (1-b) y, where C, S and Y are consumption, saving, and national income, respectively. The constant a represent the vertical intercept, and b represent the slop of the consumption schedule.

Using the following data to substitute numerical value for a and b in the consumption and saving equation

National income Consumption

(Y) (C)

$ 0 80

100 140

200 200

300 260

400 320

b. What is the economic meaning of b? Of (1-b)?

c. suppose that the amount of saving that occurs at each level of national income falls by $20 but that the value of b and (1-b) remains unchanged. Restate the saving and consumption equation inserting the new numerical value and cite a factor that might have caused the change

Reference no: EM131392101

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