Use the following information below to answer the following question(s): C = 800 + 0.65YD
I = 750
G = 1500
T = 900
-Refer to the information above. The equation for private saving, S, for the above economy is:

Question

Quizplus · Accepted Answer

Private saving in an economy is calculated as the difference between disposable income (YD) and consumption (C). Disposable income is total income (Y) minus taxes (T), so YD = Y - T. Given the consumption function C = 800 + 0.65YD and taxes T = 900, we can substitute YD = Y - 900 into the consumption function. Private saving is then YD - C, which simplifies to Y - 900 - (800 + 0.65(Y - 900)). This further simplifies to -800 + 0.35(Y - 900), making option C correct.

Use the Following Information Below to Answer the Following Question(s)