-Refer to the graph above to answer this question.What is the equation for the saving function?
A)S = -200 + 0.2Y.
B)S = 200 - 0.2Y.
C)S = 200 + 0.4Y.
D)S = -200 + 0.6Y.
E)S = -200 + 0.8Y.

Question

-Refer to the graph above to answer this question.What is the equation for the saving function?
A)S = -200 + 0.2Y. 
B)S = 200 - 0.2Y. 
C)S = 200 + 0.4Y. 
D)S = -200 + 0.6Y. 
E)S = -200 + 0.8Y.

Quizplus · Accepted Answer

The saving function equation typically has the form S = a + bY, where S represents saving, Y represents income, a is the autonomous saving (the saving amount when income is zero), and b is the marginal propensity to save (the slope of the saving function). The correct equation, A) S = -200 + 0.2Y, indicates an autonomous saving of -200 and a marginal propensity to save of 0.2, which matches the description of a saving function with these characteristics.

-Refer to the Graph Above to Answer This Question