Hi,can someone please help me with this consumption function. I need to derive savings function from it.

C=C0+cTr+c(1-t)Y

C0-autonomous consumption

c - marginal propensity to consume

Printable View

- Feb 13th 2011, 02:38 AMaldza88derivation of savings function
Hi,can someone please help me with this consumption function. I need to derive savings function from it.

C=C0+cTr+c(1-t)Y

C0-autonomous consumption

c - marginal propensity to consume - Feb 13th 2011, 11:15 AMdwsmith
- Feb 17th 2011, 05:06 AMTom G
I can't work this out now, as I've got an economic maths test soon, but this might help:

The marginal propensity to consume and the marginal propensity to save(s) sum to 1, hence: s=1-c So I'd be inclined to start with that and go from there.

Also what, if any assumptions have been made? Could you also define T and t please? I presume r is the rate of interest?