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

-Refer to Figure 9.1. An increase in autonomous consumption would be illustrated by:
A) an upward shift of the saving function.
B) a downward shift of the saving function.
C) a downward shift of the corresponding consumption function.
D) a movement to the right along the saving function.
E) a movement to the left along the saving function.

Question

The figure given below represents the saving function of an economy.
Figure 9.1
 
-Refer to Figure 9.1. An increase in autonomous consumption would be illustrated by:
A) an upward shift of the saving function. 
B) a downward shift of the saving function. 
C) a downward shift of the corresponding consumption function. 
D) a movement to the right along the saving function. 
E) a movement to the left along the saving function.

Quizplus · Accepted Answer

Autonomous consumption is consumption that is not influenced by income or other economic variables. An increase in autonomous consumption would lead to a decrease in saving at every level of income, which would be illustrated by a downward shift of the saving function. Therefore, the correct choice is B.

The Figure Given Below Represents the Saving Function of an Economy