Consumption and Savings Function

# Consumption and Savings Function

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## Consumption and Savings Function

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1. Y = C atau BEP Consumption and Savings Function Income = spending C = a + bY Consumer spending and saving S = -a + (1-b)Y According to the Keynesian consumption function, savings are positively related to the level of disposable income. At low levels of income, total spending may exceed income causing dis-saving. As income rises, total savings rise - the gradient of the savings function is given by the marginal propensity to save Disposible Inccome (Y)

2. 150 C = 30 + 0,75Y 120 Y = C or BEP Consumption and Savings Function Income = spending Consumer spending and saving autonomous consumption  30 S = -30 + (1 - 0,75)Y WhilstNational Income Rp 120 billion, Total consumption Rp 120 billion Whilst National Income rise go Rp 160 billion, Total consumption Rp 150 billion Change of Y : Change of C : MPC C function S function Y1 = 120 C1 = 120 MPC = 30/40 C = 30 + 0,75YS = -30 + (1-0,75)Y Y2 = 160 C2 = 150 MPC = 0,75 Y = 40 C = 30 (a) 0 120 160 Disposible Inccome (Y) -30