Answer to Question #135435 in Macroeconomics for James

Question

In the Keynesian macroeconomic model, the equation for the savings function is given as: S = -420 + 1/4Y. Based on this information, which of the following statements is
correct? (2)
(a) The marginal propensity to consume is 1⁄4;
(b) The level of autonomous savings is 420;
(c) At an income level of R1 000, the value of savings is 250.
(d) At an income level of R1 000, the level of savings is -170.

Answer 1

The correct answer is (b)

(b) The level of autonomous savings is 420;