If the consumption function in a Keynesian model is C = 60 + 0.7Y, then the associated saving function is __________.

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Quizplus · Accepted Answer

In the Keynesian model, the saving function (S) can be derived from the consumption function (C) by recognizing that income (Y) is either consumed (C) or saved (S), so Y = C + S. Given the consumption function C = 60 + 0.7Y, rearranging for S gives S = Y - C = Y - (60 + 0.7Y) = -60 + 0.3Y.

If the Consumption Function in a Keynesian Model Is C