Use the figure below to answer the following questions.

Figure 27.1.1
This figure describes the relationship between consumption expenditure and disposable income for an economy.
-Refer to Figure 27.1.1. Consumption and disposable income are equal
A)at all points along the consumption function.
B)when saving equals $40 billion and disposable income equals $540 billion.
C)when disposable income is $500 billion.
D)when disposable income is $600 billion.
E)when disposable income is greater than or equal to $500 billion.

Question

Use the figure below to answer the following questions.
  
Figure 27.1.1
This figure describes the relationship between consumption expenditure and disposable income for an economy.
-Refer to Figure 27.1.1. Consumption and disposable income are equal
A)at all points along the consumption function. 
B)when saving equals $40 billion and disposable income equals $540 billion. 
C)when disposable income is $500 billion. 
D)when disposable income is $600 billion. 
E)when disposable income is greater than or equal to $500 billion.

Quizplus · Accepted Answer

The consumption function intersects the 45-degree line (where consumption expenditure equals disposable income) at point C, where disposable income is $500 billion. Therefore, consumption and disposable income are equal when disposable income is $500 billion.

Use the Figure Below to Answer the Following Questions