Question : The saving function is given by S = 0.4Y - 300. If disposable income is INR 2,500, what is the level of saving?
Option 1: INR 400
Option 2: INR 500
Option 3: INR 700
Option 4: INR 1,000
Correct Answer: INR 700
Solution : The correct answer is (c) INR 700
To find the level of saving, we can substitute the given value of disposable income (Y) into the saving function.
Given: S = 0.4Y - 300
Disposable income (Y) = INR 2,500
Substituting the value of Y into the saving function, we get:
S = 0.4 * 2500 - 300
S = 1000 - 300
S = 700
Therefore, the level of saving is INR 700.
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