Linear equations for the consumption and saving schedules take the general form:

C=a+bY

and

S= a+ (1 b)Y,

whereC,S, andYare consumption, saving, and national income, respectively. The constantarepresents the vertical intercept, andbrepresents the slope of the consumption schedule.

a. Use the following data to substitute specific numerical values into the consumption and saving equations.

National Income (Y) Consumption (C)

$0 $100

200 290

400 480

600 670

800 860

C= ------ +-------- Y

S= ------- + -------- Y

B. Suppose that the amount of saving that occurs at each level of national income falls by $20 but that the values of b and (1 - b) remain unchanged. Restate the saving and consumption equations inserting the new numerical values.

C= ------ +-------- Y

S= ------- + -------- Y