When the consumption schedule lies below the 45-degree reference line, saving
A) must be negative.
B) is zero.
C) is positive.
D) is negatively sloped.

Question

Quizplus · Accepted Answer

When the consumption schedule lies below the 45-degree reference line, it means that people are consuming less than they are earning. This results in a positive amount that can be saved, hence the answer is C.

When the Consumption Schedule Lies Below the 45-Degree Reference Line