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Question
Which formula represents the consumption function?
Options
\[APC=\frac{C}{Y}\]
\[C=\bar{C}+cY\]
\[MPC=c=\frac{\Delta C}{\Delta Y}\]
\[MPS=s=\frac{\Delta S}{\Delta Y}\]
MCQ
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Solution
The consumption function is \[C=\bar{C}+cY\]. Here, \[\bar{C}\] is autonomous consumption and \[cY\] is induced consumption.
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