If the national income, Y, is 1000 units, then consumption, C, is 800 units. Also whenever income
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If the national income, Y, is 1000 units, then consumption, C, is 800 units. Also whenever income rises by 100, consumption increases by 70. Assuming that the consumption function is linear:
(a) state the marginal propensity to consume and deduce the marginal propensity to save;
(b) find an expression for C in terms of Y.
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