Question

given that c=$500 + 0.8yd, if the level of disposable income is $1,000, the level of saving is a)$300. b)-$300 c)$500 d)-$1,300

Answer 1

If we are given with the level of saving as a function of level of disposable income:
c = 500 + 0.8 d
where d is the disposable income and it is equal to 1000. Solving for c:
c = 500 + 0.8 (1000)
c = $1300