The figure given below represents the saving function of an economy.
Figure 9.1

-Refer to Figure 9.1. Which of the following statements is true for real GDP levels below $400 billion?
A) Saving exists because consumption is smaller than disposable income.
B) Saving does not exist because consumption exceeds disposable income.
C) The corresponding section of the consumption function lies below the 45-degree line.
D) Autonomous consumption is equal to zero.
E) The slope of the consumption function becomes negative.

Question

The figure given below represents the saving function of an economy.
Figure 9.1
 
-Refer to Figure 9.1. Which of the following statements is true for real GDP levels below $400 billion?
A) Saving exists because consumption is smaller than disposable income. 
B) Saving does not exist because consumption exceeds disposable income. 
C) The corresponding section of the consumption function lies below the 45-degree line. 
D) Autonomous consumption is equal to zero. 
E) The slope of the consumption function becomes negative.

Quizplus · Accepted Answer

When real GDP levels are below $400 billion, consumption exceeds disposable income, meaning saving does not exist.

The Figure Given Below Represents the Saving Function of an Economy