If consumption function in a 2-sector model is C=100...?
If consumption function in a 2-sector model is C=100 + 0.80Y and I = 20 Billion; where C is consumption, Y is income and I is investment,
a. Equilibrium income equal to:___________
b. Saving function is:__________
c MPC is:__________
- Anonymous10 years agoFavorite Answer
I assume by two sector you mean house hold sector and business sector.
In this case use the accounting identity Y=C+I+G
If G=0 then Y=600. Output is equal to income. So income is then equal to 600
The savings function is S=Y-C-G so S= Y-(100+(8/10)Y)=600-(100+(8/10)600)=20