The vertical distance between the 45-degree line and the consumption line represents

Question

Quizplus · Accepted Answer

The vertical distance between the 45-degree line and the consumption line represents saving or dissaving. This is because the 45-degree line represents all points where consumption equals income, so any vertical distance to the consumption line indicates the portion of income not consumed, which is either saved (if above the consumption line) or dissaved (if below the consumption line).

The Vertical Distance Between the 45-Degree Line and the Consumption