Suppose the consumption function is C = $100 + 0.85Y_D.If disposable income is $400,saving is A)-$40.00. B)$40.00. C)-$15.00. D)$15.00.

Question

Quizplus · Accepted Answer

The consumption function is C = $100 + 0.85Y_D. With disposable income (Y_D) of $400, consumption (C) is $100 + 0.85($400) = $100 + $340 = $440. Since saving is disposable income minus consumption, saving is $400 - $440 = -$40.00.

Suppose the Consumption Function Is C = $100 + 0