(Advanced analysis) Assume the following consumption schedule: C = 20 + 0.9Y, where C is consumption and Y is disposable income. At an $800 level of disposable income, the level of saving is
A) $180.
B) $740.
C) $60.
D) $18.

Question

Quizplus · Accepted Answer

We can find the level of saving by subtracting consumption from disposable income:

Y - C = Y - (20 + 0.9Y) = 0.1Y - 20

At a disposable income level of $800:

0.1($800) - 20 = $60

Therefore, the level of saving is $60, which corresponds to choice C.

(Advanced Analysis) Assume the Following Consumption Schedule: C = 20