FIGURE 21-1
-Refer to Figure 21-1. If disposable income is zero, then
A) autonomous desired consumption is 0A.
B) autonomous desired consumption is 0Y1.
C) desired consumption must also be zero.
D) the level of desired saving will be 0A.
E) autonomous desired saving will be 0A.

Question

FIGURE 21-1
-Refer to Figure 21-1. If disposable income is zero, then
A) autonomous desired consumption is 0A. 
B) autonomous desired consumption is 0Y1. 
C) desired consumption must also be zero. 
D) the level of desired saving will be 0A. 
E) autonomous desired saving will be 0A.

Quizplus · Accepted Answer

When disposable income is zero, the only source of consumption is the autonomous desired consumption (represented by the intercept of the consumption function with the vertical axis). Therefore, autonomous desired consumption is 0A.

FIGURE 21-1 -Refer to Figure 21-1. If Disposable Income Is Zero, Then