(Advanced analysis) Refer to the diagram. The equation for the consumption schedule is
A) C = 0.6Y.
B) Y = 60 + 0.6C.
C) C = 60 + 0.6Y.
D) C = 60 + 0.4Y.

Question

(Advanced analysis) Refer to the diagram. The equation for the consumption schedule is
A) C = 0.6Y. 
B) Y = 60 + 0.6C. 
C) C = 60 + 0.6Y. 
D) C = 60 + 0.4Y.

Quizplus · Accepted Answer

The consumption schedule is represented by the line that starts from the point (0,60) on the Y-axis and has a slope of 0.6. This indicates that for every extra unit of income (Y), consumption (C) will increase by 0.6 units. Thus, the equation for the consumption schedule is C = 60 + 0.6Y.

(Advanced Analysis) Refer to the Diagram