Question : If MPC is four times MPS and consumption at zero level of income is 80 crore. Derive the saving function.
Option 1: S=80+0.8Y
Option 2: S=80-0.8Y
Option 3: S= -80+0.2Y
Option 4: S= -80+0.8Y
Answer (1)
16th Jan, 2024
Correct Answer: S= -80+0.2Y
Solution : MPC:MPS= 4:1, or
MPC:MPS= 0.8:0.2, since MPC+MPS= 1
S= -80+0.2Y
Hence, Option C is correct.
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