Where the consumption function intersects the 45-degree line
A) savings will be negative.
B) consumption will equal only autonomous consumption.
C) the average propensity to consume is 0.5.
D) saving will be zero.

Question

Quizplus · Accepted Answer

When the consumption function intersects the 45-degree line, it means that the level of consumption is equal to the level of income. Therefore, there is no excess income left for saving. Hence, saving will be zero.

Where the Consumption Function Intersects the 45-Degree Line