Here is a consumption function: C = C₀ + MPC(Y_d).If consumption is $3,000,MPC =0.80,and disposable income is $2,900,what does autonomous consumption equal? A) $100 B) $5,900 C) $680 D) $500 E) none of the above

Question

Quizplus · Accepted Answer

Using the consumption function: C = C₀ + MPC(Y_d) Substituting the given values: 3000 = C₀ + 0.80(2900) 3000 = C₀ + 2320 C₀ = 680 Therefore, autonomous consumption (C₀) equals $680. The answer is (C).

Here Is a Consumption Function: C = C0 + MPC(Yd)

Here Is a Consumption Function: C = C₀ + MPC(Y_d)