What determines consumption. Consider the consumption function:
C = 600 + .9YD
Where C repres...
Business, 11.03.2021 14:00, jkw1222p0ttvq
What determines consumption. Consider the consumption function:
C = 600 + .9YD
Where C represents consumption and YD represents disposable income (i. e., Y – T). To begin, assume there is no government, investment, or foreign spending. Further, assume taxes are originally set to zero so YD and Y are equal.
Write a mathematical equation expressing Savings as a function of income. In other words, what is the savings function in this economy?
What is the equilibrium level of income and consumption in this economy?
How much savings occurs in this equilibrium?
Imagine that the citizens of this country impose an income tax of 10% on themselves. In other words, for each dollar of income earned, the citizens must pay 10 cents of it to the government before they can spend the remainder of their money. After imposing this tax, how what is the new value of income and consumption in this economy?
Answers: 2
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