Assume in country X the average marginal propensity to save is 0.2 when the aggregate income equals

Question:

Assume in country X the average marginal propensity to save is 0.2 when the aggregate income equals zero and consumption is 50. Derive the saving function and consumption function. What happens to consumption when the marginal propensity to save decreases to 0.1?Explain your answer and show this on a graph.

Step by Step Answer:

Related Book For  book-img-for-question

Principles Of Macroeconomics

ISBN: 9781292303826

13th Global Edition

Authors: Karl E. Case,Ray C. Fair , Sharon E. Oster

Question Posted: