Given that C= 500+ 0.8y, if the level of disposable income is 1000, The level of saving is?
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Expert's answer
2012-03-16T09:03:15-0400
Let’s indicate, that Y is a level of disposable income, S is the level of saving and C is the level of consumption, then: Y = S + C S = Y – C For the disposable income (1000) the level of savings is: S = y – C = y – (500+ 0.8y) = 0,2y – 500 = 0,2 * 1000 – 500 = 200 – 500 = -300. The level of savings is -300, this means that people live in debt.
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