The letters Y,C,S,and I are used to represent GDP,consumption,saving,and investment respectively.

-The equation representing the consumption schedule for the above economy is:
A) C = Y - .6S.
B) Y = C + S.
C) C = 60 + .4Y.
D) C = 60 + .6Y.

Question

The letters Y,C,S,and I are used to represent GDP,consumption,saving,and investment respectively.
 
-The equation representing the consumption schedule for the above economy is:
A) C = Y - .6S. 
B) Y = C + S. 
C) C = 60 + .4Y. 
D) C = 60 + .6Y.

Quizplus · Accepted Answer

The consumption schedule represents the relationship between consumption and GDP. The equation C = 60 + .6Y means that consumption is equal to 60 plus 60% of GDP. This implies a positive relationship between consumption and GDP, with a slope of 0.6.

The Letters Y,C,S,and I Are Used to Represent GDP,consumption,saving,and Investment