Suppose the consumption function is C = $500 + 0.8Y. If Y = $1,000, then autonomous consumption is
A) $500.
B) $800.
C) $1,000.
D) $1,300.

Question

Quizplus · Accepted Answer

Autonomous consumption is the part of consumption that does not depend on income. In this case, since the consumption function is C = $500 + 0.8Y, the autonomous consumption is the intercept or the constant term, which is $500.

Suppose the Consumption Function Is C = $500 + 0