Question

If the consumption function is defined as C = 5,500 + 0.9Y, what is the

autonomous level of consumption expenditure?
A. $4,950
B. $5,500
C. $6,050
D. $6,111

Answer 1

Option B ($5,500) is the appropriate choice.

Step-by-step explanation:

The given expression is:

⇒
`C = 5,500 + 0.9Y`

At the zero (0) level of income, the consumption would be the Autonomous consumption.

then,

Y = 0

On substituting the value of "Y" in the given expression, we get

⇒
`C=5,500+0.9(0)`

⇒
`=5,500+0`

⇒
`=5,500` (%)