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Answer to Question #94438 in Macroeconomics for Nomthandazo
Question #94438
given that C=C1+ cy and C1 =500, c=3/4, y =1000
which one of the following statement is correct
(1) autonomous consumption is R1000
(2) induced consumption is R11250
(3) induced consumption is R750
(4) the marginal propensity to save is 3/4
which one of the following statement is correct
(1) autonomous consumption is R1000
(2) induced consumption is R11250
(3) induced consumption is R750
(4) the marginal propensity to save is 3/4
Expert's answer
correct statement is (3) induced consumption is R750 :
cy = 1000*3/4 = 750
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