The figure given below shows the consumption functions of an economy. Figure 9.4 -Refer to Figure 9.4. The shift of the consumption function from C₁ to C₂ has caused autonomous saving to: A) decrease by the distance between H and B. B) increase by the distance between C and B. C) decrease by the distance between C and B. D) increase by the distance between H and G. E) decrease by the distance between D and E.

Question

Quizplus · Accepted Answer

Autonomous saving is the vertical intercept of the saving function. In this case, the consumption function has shifted upward from C₁ to C₂, causing a decrease in the vertical intercept (autonomous saving) by the distance between C and B. Therefore, the correct answer is C.

The Figure Given Below Shows the Consumption Functions of an Economy