According to the above figure, at an income level of Y1,
A) the economy saves an amount equal to BD.
B) the marginal propensity to save is falling.
C) the average propensity to save is greater than one.
D) the economy dissaves an amount equal to BD.

Question

Quizplus · Accepted Answer

At an income level of Y1, the consumption line is above the 45-degree line (which represents income), indicating that consumption is greater than income. This means the economy is dissaving, not saving, by the amount represented by the distance BD.

According to the Above Figure, at an Income Level of Y1