The letters Y, C, S, and I are used to represent GDP, consumption, saving, and investment respectively. The equation representing the consumption schedule for the above economy is:
A)C = Y -.6S.
B)Y = C + S.
C)C = 60 + .4Y.
D)C = 60 + .6Y.

Question

The letters Y, C, S, and I are used to represent GDP, consumption, saving, and investment respectively.  The equation representing the consumption schedule for the above economy is:
A)C = Y -.6S. 
B)Y = C + S. 
C)C = 60 + .4Y. 
D)C = 60 + .6Y.

Quizplus · Accepted Answer

The consumption schedule is the relationship between consumption and income. In this equation, consumption (represented by C) is equal to a fixed amount of 60 plus 0.6 times income (represented by Y). Choice D correctly represents this relationship.

The Letters Y, C, S, and I Are Used to Represent