-The figure above shows a nation's consumption function.If disposable income is $4 trillion, then the MPC is ________ and saving is ________.
A) positive; positive
B) positive; negative
C) negative; positive
D) negative; negative
E) positive; zero

Question

-The figure above shows a nation's consumption function.If disposable income is $4 trillion, then the MPC is ________ and saving is ________.
A) positive; positive 
B) positive; negative 
C) negative; positive 
D) negative; negative 
E) positive; zero

Quizplus · Accepted Answer

The MPC is positive because consumption increases as disposable income increases. Saving is positive because the consumption function is below the 45-degree line, indicating that not all of disposable income is being consumed.

-The Figure Above Shows a Nation's Consumption Function