The consumption and saving schedules reveal that the
A) MPC is greater than zero but less than one.
B) MPC and APC are equal at the point where the consumption schedule intersects the 45- degree line.
C) APS is positive at all income levels.
D) MPC is equal to or greater than one at all income levels.

Question

Quizplus · Accepted Answer

The consumption and saving schedules show that as income increases, consumption increases but at a lesser rate than income. This implies that the MPC is greater than zero but less than one. Additionally, the point where the consumption schedule intersects the 45-degree line is where the MPC and APC are equal, so B is incorrect. APS can be negative at low income levels (when consumption is greater than income) and positive at higher income levels (when saving increases with income), so C is also incorrect. D is incorrect because an MPC greater than one implies that individuals are spending more than their income, which is not sustainable in the long run.

The Consumption and Saving Schedules Reveal That the