When a family's income is low and it is spending more on consumption than it is receiving in income
A) the APC must be increasing.
B) the APC must be equal to the ratio of planned consumption expenditure to total saving.
C) the MPC must be zero.
D) some segment of the consumption function curve lies above the 45-degree line, indicating dissaving.

Question

Quizplus · Accepted Answer

If a family's income is low and it is spending more on consumption than it is receiving in income, it means that the family is either consuming its savings or borrowing to finance consumption. This indicates that some segment of the consumption function curve lies above the 45-degree line, indicating dissaving. Therefore, option D is the correct choice. The APC and MPC cannot be determined with the given information, and option B is not relevant to the situation described.

When a Family's Income Is Low and It Is Spending