1.

The consumption function is given as C = 40+0.6Y. Derive saving function.

Answer» We know, Income (Y) = Consumption ( C) + Saving (S).
It means, S= Y-C `" "…(i)`
Given: C= 40+0.6Y `" "…(ii)`
Putting value of C from (ii) in (i), we get: S=Y-(40+0.6Y)
S=Y-40-0.6Y
S=-40+0.4Y


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