(Advanced Analysis) Linear equations for the consumption and saving schedules take the general form:

C = a + bY

and

S = - a + (1 - b)Y

where C, S, and Y are consumption, saving, and national income, respectively. The constant a represents the vertical intercept, and b represents the slope of the consumption schedule.

a. Use the following data to substitute specific numerical values into the consumption and saving equations.

National
Income (Y) Consumption (C)
$ 0 $75
100 150
200 225
300 300
400 375

C = $ + Y

S = $ + Y

b. Suppose that the amount of saving that occurs at each level of national income falls by $20 but that the values of b and (1 - b) remain unchanged. Restate the saving and consumption equations inserting the new numerical values