Derive the saving function and the consumption function

Reference no: EM131309081

Assume in a simple economy that the level of saving is -500 when aggregate output equals zero and that the marginal propensity to save is 0.2. Derive the saving function and the consumption function, and draw a graph showing these functions. At what level of aggregate output does the consumption curve cross the 45° line? Explain your answer and show this on the graph.

Reference no: EM131309081

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