If the consumption function is above 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

Quizplus · Accepted Answer

When the consumption function is above the 45-degree line, it indicates that consumption exceeds income, leading to negative saving because individuals are spending more than they are earning.

If the Consumption Function Is Above the 45-Degree Line