Suppose that the marginal propensity to save is frac{dS}{dy} = 0.3 - frac{1}{sqrt{9y + 2}} (in billions of dollars) and that consumption is $7 billion when disposable income is $0. Find the national consumption function. (Round the constant of integration to the nearest hundredth.) C(y) =
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We know the marginal propensity to save (MPS) is 0.3. Since the sum of the marginal propensity to consume (MPC) and MPS is always 1, we can find the MPC: MPC = 1 - MPS = 1 - 0.3 = 0.7 Show more…
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