Answered: Refer to the above figure. Dissaving…

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

The graph shows the relationship between real disposable income and planned consumption. The horizontal axis measures real disposable income, while the vertical axis measures the level of planned consumption. The graph shows a consumption function, represented by an upward-sloping, straight line. The consumption function intercepts the vertical axis at a point labeled A. The graph also shows a 45-degree line that passes through the origin. The consumption function and the 45-degree line intersect at a point labeled B.

Refer to the above figure. Dissaving occurs,

to the left of point B.

to the right of point B.

only at point A.

only at point B.

Planned Consumption
Consumption
function
B
A
45°
Real Disposable Income

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