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Ex Ante Consumption

Saving functi...

Question

Saving function is the functional relationship between

A

Income and consumption

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B

Price and saving

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C

Saving and income

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D

Consumption and saving

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Solution

The correct option is C
Saving and income

Saving function is the functional relationship between savings and income.

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Q. The consumption curve makes an intercept of Rs. 60 crores on the Y-axis. MPC:MPS can be expressed as 1:3, then derive the saving and consumption function. Also determine the level of income, when saving becomes zero?
(Saving Function: S = -60 + 0.75 (Y); Consumption Function: C = 60 + 0.25 09; Saving will become zero at income of Rs. 80 acres)

Q. The consumption function is expressed as: C = 100 + 0.25 Y (where C = consumption expenditure and Y = National Income). Calculate saving if consumption expenditure at equilibrium level of national income is Rs. 500 crores. (Saving = Rs. 1,100 cores)

Q. The consumption function is given as C = 75 + 0.75 Y and autonomous investment is Rs. 100 crore. Derive the saving function and calculate the level of income at which saving is equal to investment.
(Saving Function: S = -75 + 0.25 Y; Level of income = Rs. 700 crore)

Q. Saving function is a counterpart of consumption function.

In an economy S = - 50 + 0.5Y is the saving function (where S = saving and Y = national income) and investment expenditure is 7,000. Calculate

(i) Equilibrium level of national income.

(ii) Consumption expenditure at equilibrium level of national income.

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