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Effects of an Autonomous Change on Equilibrium Demand in the Product Market

When C =300+0...

Question

When C = 300 + 0.8Y and Y = 1,000, saving at zero income level will be

A

300

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B

-300

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C

1,100

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D

800

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Solution

The correct option is B
-300

C + S = Y

At zero income level,

C = -S

When Y = 0, C = 300 + 0.8(0) = 300

Therefore, S = -300

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