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Displacement in 2D Motion

The consumpti...

Question

The consumption function is given as C = 40 + 0.6Y. Derive saving function.

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Solution

Given, consumption function, $C = 40 + 0.6 Y$ .
Income = Consumption + Savings
=> Savings (S) = Income (Y) - Consumption (C)
=> $S = Y - C$
=> $S = Y - (40 + 0.6 Y)$
=> $S = Y - 40 - 0.6 Y$
=> $S = - 40 + Y (1 - 0.6)$
=> $S = - 40 + 0.4 Y$

Saving function: $S = - 40 + 0.4 Y$ ,
where,
autonomous savings $= - 40 c r o r e s$ , MPS $= 0.4$ .

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