Suppose the consumption schedule is: C = 20 + .9Y, where C is consumption and Y is disposable income.Refer to the above data.At an $800 level of disposable income, the level of saving is:
A)$180
B)$740
C)$60
D)$18

Question

Quizplus · Accepted Answer

Saving is equal to disposable income minus consumption, or S = Y - C. Substituting the given consumption function, S = Y - (20 + .9Y) = .1Y - 20. At Y = 800, S = .1(800) - 20 = $60. Therefore, the correct answer is option C.

Suppose the Consumption Schedule Is: C = 20