According to Keynes, if the consumption-income relationship is given as , where is disposable income and and are constants, then the saving-income relationship is:
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JNU SIS 2021 Question 30: Consumption and investment
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According to Keynes, if the consumption-income relationship is given as C = a + bY_D, where Y_D is disposable income and a and b are constants, then the saving-income relationship is: (A) S = a + (1 - b)Y_D. (B) S = -a + (1 - b)Y_D (C) S = a + (1 - b)/Y_D. (D) S = -a + ((1 - b))/Y_D
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What this question tests
This question is on The Keynesian consumption function, part of Consumption and investment in Macroeconomics.
Consumption as a function of current income: the propensities to consume and save.
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