Using the disposable income level at which the consumption function intersects the 45-degree line,we can identify
A)Full employment at the intersection point.
B)An inflationary gap to the right of the intersection point.
C)Dissaving to the left of the intersection point.
D)Dissaving to the right of the intersection point.

Question

Quizplus · Accepted Answer

The point where the consumption function intersects the 45-degree line represents the level of disposable income at which all income is consumed, and saving is zero. To the left of this point, consumption exceeds income, indicating dissaving.

Using the Disposable Income Level at Which the Consumption Function