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

An increase in autonomous consumption would lead to a decrease in saving at each level of income. This would lead to a downward shift of the saving function. Option A suggests an upward shift which is incorrect. Option C is also incorrect as the consumption function is not given in the figure. Option D and E suggest movements along the saving function whereas an increase in autonomous consumption would lead to a shift of the saving function.

The Figure Given Below Represents the Saving Function of an Economy