As shown in Exhibit 2, savings occurs: Group of answer choicesat 0.between 0 and $4 trillion.at $2 trillion.where disposable income is greater than $4 trillion. **Exhibit 2: Aggregate Expenditures Function**This graph illustrates the relationship between real disposable income and real consumption and investment expenditures, expressed in trillions of dollars per year.**Axes:**- **Vertical Axis (Y-axis):** Represents real consumption and investment expenditures, measured in trillions of dollars per year.- **Horizontal Axis (X-axis):** Represents real disposable income, also measured in trillions of dollars per year.**Lines:**- **Red Line (C):** Indicates consumption expenditures.- **Blue Line (C + I):** Represents the sum of consumption and investment expenditures.- **Black Line (45° line):** Shows points where real consumption and investment expenditures equal real disposable income.The graph demonstrates how consumption (C) increases with disposable income and how investment (combined with consumption to form C + I) further shifts the expenditure line upwards. This indicates that as disposable income grows, both consumption and the sum of consumption and investment increase, reflecting economic growth dynamics.

In economics, the current value of all finished commodities and services in the economy is aggregate…

Answered: As shown in Exhibit 2, savings occurs:…

As shown in Exhibit 2, savings occurs: Group of answer choices at 0. between 0 and $4 trillion. at $2 trillion. where disposable income is greater than $4 trillion

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

As shown in Exhibit 2, savings occurs:

Group of answer choices

at 0.

between 0 and $4 trillion.

at $2 trillion.

where disposable income is greater than $4 trillion.

**Exhibit 2: Aggregate Expenditures Function**

This graph illustrates the relationship between real disposable income and real consumption and investment expenditures, expressed in trillions of dollars per year.

**Axes:**

- **Vertical Axis (Y-axis):** Represents real consumption and investment expenditures, measured in trillions of dollars per year.
- **Horizontal Axis (X-axis):** Represents real disposable income, also measured in trillions of dollars per year.

**Lines:**

- **Red Line (C):** Indicates consumption expenditures.
- **Blue Line (C + I):** Represents the sum of consumption and investment expenditures.
- **Black Line (45° line):** Shows points where real consumption and investment expenditures equal real disposable income.

The graph demonstrates how consumption (C) increases with disposable income and how investment (combined with consumption to form C + I) further shifts the expenditure line upwards. This indicates that as disposable income grows, both consumption and the sum of consumption and investment increase, reflecting economic growth dynamics.

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