Refer to the information provided in Figure 8.4 below to answer the questions that follow. Figure 8.4
-If the consumption function is below the 45-degree line,
A) consumption is less than income and saving is positive.
B) consumption is less than income and saving is negative.
C) consumption exceeds income and saving is positive.
D) consumption exceeds income and saving is negative.

Question

Refer to the information provided in Figure 8.4 below to answer the questions that follow.  Figure 8.4
-If the consumption function is below the 45-degree line,
A) consumption is less than income and saving is positive. 
B) consumption is less than income and saving is negative. 
C) consumption exceeds income and saving is positive. 
D) consumption exceeds income and saving is negative.

Quizplus · Accepted Answer

If the consumption function is below the 45-degree line, it means that consumption is less than income. This results in positive saving, as individuals are not consuming all of their income, but rather saving some of it. Therefore, Choice A is correct.

Refer to the Information Provided in Figure 8