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In a simple economy (assume there are no taxes, thus, Y is disposable income), the consumption function is:
C = 200+ 0.80Y
00
The current level of real GDP is $4000.
At this level of real GDP, consumption will be $, and savings will be $1. If GDP were to increase by $1000, consumption would increase by $(Round your
responses to the nearest dollar.)

Respuesta :

Using linear function concepts, it is found that consumption would increase by $800.

What is a linear function?

A linear function is modeled by:

[tex]y = mx + b[/tex]

In which:

  • m is the slope, which is the rate of change, that is, by how much y changes when x changes by 1.
  • b is the y-intercept, which is the value of y when x = 0.

In this problem, the function is given by:

C = 200 + 0.8Y.

Which means that the slope is of m = 0.8 per unit of Y.

For 1000 units:

0.8 x 1000 = 800.

Consumption would increase by $800.

More can be learned about linear function concepts at https://brainly.com/question/24808124

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