Thank you for visiting If the consumption function is C 200 text billion 0 9Y calculate a How much do consumers spend with an income of 3 trillion b. This page is designed to guide you through key points and clear explanations related to the topic at hand. We aim to make your learning experience smooth, insightful, and informative. Dive in and discover the answers you're looking for!
Answer :
Final answer:
Consumers would spend $2.9 trillion with an income of $3 trillion, and they would save $0.1 trillion.
Explanation:
To calculate how much consumers spend with an income of $3 trillion, we need to substitute $3 trillion for Y in the consumption function equation: C = $200 billion + 0.9Y. So, C = $200 billion + 0.9($3 trillion) = $200 billion + $2.7 trillion = $2.9 trillion.
To calculate how much they save with the same income, we subtract the amount spent from the total income of $3 trillion: Savings = $3 trillion - $2.9 trillion = $0.1 trillion.
Therefore, the correct option is D) $2.9 trillion, $0.1 trillion.
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