In the consumption function model, the 45-degree line represents where
A) the real disposable income is equal to zero.
B) planned real saving is equal to zero.
C) planned real consumption spending is equal to zero.
D) planned real saving is greater than actual real savings.

Question

Quizplus · Accepted Answer

The 45-degree line represents where planned real consumption spending is equal to real disposable income. Therefore, the point where the 45-degree line crosses the horizontal axis represents where planned real saving is equal to zero.

In the Consumption Function Model, the 45-Degree Line Represents Where