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. When disposable income is $200 billion,
A)saving is equal to line segment AD.
B)households are consuming less than $200 billion.
C)businesses are spending more than households because the consumption function lies above the 45° line.
D)households are dissaving an amount equal to line segment AB.
E)households are saving an amount equal to line segment AB.

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. When disposable income is $200 billion,
A)saving is equal to line segment AD. 
B)households are consuming less than $200 billion. 
C)businesses are spending more than households because the consumption function lies above the 45° line. 
D)households are dissaving an amount equal to line segment AB. 
E)households are saving an amount equal to line segment AB.

Quizplus · Accepted Answer

When disposable income is $200 billion, households are dissaving, meaning they are spending more than their income, which is represented by line segment AB.

Use the Figure Below to Answer the Following Questions