Suppose that C = a + bY , where C =consumption, a = consumption at zero income, b = slope, and Y =...

Question

Suppose that C = a + bY , where C =consumption, a = consumption at zero income, b = slope, and Y = income.
a. Are C and Y positively related or are they negatively related?
b. If graphed, would the curve for this equation slope upward
or slope downward?
c. Are the variables C and Y inversely related or directly
related?
d. What is the value of C if a = 10, b = .50, and Y = 200?
e. What is the value of Y if C = 100, a = 10, and b = .25?

David · Accepted Answer

Suppose that C = a + bY ,  
where C =consumption, a = consumption at zero income, b = slope, and Y = income. 
a. Are C and Y positively related or are they negatively related? 
Answer: 
C and Y are positively related. This is because as income (Y) rises, people spend more on 
consumption (C).

Suppose that C = a + bY , where C =consumption, a = consumption at zero income, b = slope, and Y = income. a. Are C and Y positively related or are they negatively related? b. If graphed, would the...

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