If the level of income is $9 trillion, C₀ = $2 trillion, C_y = .8 and t =.25, the level of consumption spending
(C) would equal

Name: If the level of income is $9 trillion, C 0 = $2 trillion, C y = .8 and t =.25, the level of consumption spending (C) would equal
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Question

If the level of income is $9 trillion, C₀ = $2 trillion, C_y = .8 and t =.25, the level of consumption spending (C) would equal

Quizplus · Accepted Answer

The consumption function is C = C₀ + Cᵧ(1-t)Y. Plugging in the values: C = $2 trillion + 0.8(1-0.25)($9 trillion) = $2 trillion + 0.8(0.75)($9 trillion) = $2 trillion + $5.4 trillion = $7.4 trillion.

If the Level of Income Is $9 Trillion, C0 =

If the Level of Income Is $9 Trillion, C₀ =