Site icon DiscussEconomics

A Basic Consumption Function Question

**This question was originally posted in our Economics Forums and reposted here.**

I’m trying to work out the national economy of a fictitious country.

Government expenditure = 200
Investment Expenditure = 100
Household Expenditure is described by the consumption function C = 140 + 0.6(Y-T) where Y is national income and T is total taxes. T = tY and t the tax rate is 0.25
Exports = 120
Imports = 120

I’m struggling to work it out particularly the consumption function element.

Can anyone help!


Exit mobile version