In a diagram with the___________ consumption function, the 45 -degree line indicates all points where
A) consumption expenditures and disposable income are equal.
B) saving and disposable income are equal.
C) saving and investment are equal.
D) consumption expenditures and saving are equal.

Question

Quizplus · Accepted Answer

The 45-degree line represents the points where consumption equals disposable income. This is because at any point on the line, all income is either consumed or saved, and consumption and disposable income are equal. Therefore, choice A is the correct answer.

In a Diagram with The___________ Consumption Function, the 45 -Degree