Question

What is the saving function ? Derive it from consumption function.

Answer 1

Savings function shows the functional relationship between the savings and national income. As saving function is corollary of consumption function, therefore it can be derived from the consumption function. C=c bar + by , put this in the equation S=Y-C , we will get,
S=Y-C
S=Y-(c bar+bY)
S = -c bar +(1-b) Y