Answer to Question #206722 in Macroeconomics for Lizy

Question

Suppose that C= a+ bY, where C= consumption, a= consumption at zero income, b= slope and Y=income. Are C and Y positively or negatively related?

Answer 1

C and Y are positively related.

This is because an increase in income will lead to an increase in consumption and the curve for the given function will slope upwards.