1.

Distinguish between:Consumption Function and Saving Function

Answer»
Consumption FunctionSavings Function
It depicts the relationship between consumption expenditure and the level of disposable incomeIt depicts the relationship between savings and the level of disposable income.
C = f (Yd), where C represents consumption expenditure Yd represents disposable income.\(S=-\bar{S} + sY_d\)
\(\bar{S}\) represent marginal saving*
s represents marginal propensity to save (MPS) Yd represents disposable income.
It shows how a change in income influences the consumption pattern.It shows how a change in income influences savings.


Discussion

No Comment Found

Related InterviewSolutions