Question

How would you specify the saving function, if the consumption function is given below?

$\text{C = bY}$

Answer 1

$\text{S=(1-b)Y}$.

In the C-function, there is no constant term of $\overline{\text{C}}$. Accordingly, there is no constant term $-\overline{\text{S}}$ in the saving function. Such a C - function (or S - function) indicates that $\text{C}=0$ (or $\text{S}=0$) when $\text{Y}=0$. Therefore, autonomous consumption and savings are zero.