In the model developed in the text, consumption spending (C) is equal to A) C₀ + C_y x Y^D. B) C₀ + C_y x Y. C) C₀ + C_y x (1-t)Y^D. D) C_y x Y^D.

Name: In the model developed in the text, consumption spending (C) is equal to A) C 0 + C y x Y D . B) C 0 + C y x Y. C) C 0 + C y x (1-t)Y D . D) C y x Y D .
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Question

Quizplus · Accepted Answer

Consumption spending is equal to autonomous consumption (C0) plus the marginal propensity to consume (Cy) multiplied by disposable income (Y^D).

In the Model Developed in the Text, Consumption Spending (C)