Question

C=50+0.75Y
1. At what level of income saving become zero?
2. If autonomous investment with above consumption function is 200.at what level saving is equal to investment?

Answer 1

1.

Y=G+I+C

Y=50+0.75Y

0.25Y=50

$$\frac {50}{0.25}=200$$

2.

$$200=50+0.75Y$$

$$Y=\frac {150}{0.75}$$

$$Y=200$$