Refer to the information provided in Table 8.1 below to answer the questions that follow.
Table 8.1
-Refer to Table 8.1. The equation for the aggregate consumption function is
A) C = 80 + 0.95Y.
B) C = 80 + 0.9Y.
C) C = 80 + 0.75Y.
D) C = -80 + 0.45Y.

Question

Refer to the information provided in Table 8.1 below to answer the questions that follow.
Table 8.1 
-Refer to Table 8.1. The equation for the aggregate consumption function is
A) C = 80 + 0.95Y. 
B) C = 80 + 0.9Y. 
C) C = 80 + 0.75Y. 
D) C = -80 + 0.45Y.

Quizplus · Accepted Answer

The consumption function is given by C = a + bY, where a represents autonomous consumption and b represents the marginal propensity to consume (MPC). In this case, the value of a is 80 (autonomous consumption) and the value of b is 0.9 (MPC), as shown in Table 8.1. Therefore, the equation for the aggregate consumption function is C = 80 + 0.9Y, which corresponds to choice B.

Refer to the Information Provided in Table 8