You are given the following linear consumption function: C = 200 + 0.80Yd. What is the size of the autonomous consumption expenditures and induced expenditures?
What will be an ideal response?
Autonomous consumption expenditures are not related to disposable income and measured by the intercept term, 200. Induced consumption expenditures result from changes in the level of disposable income measured by the slope, the marginal propensity to consume, 0.80.
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