At the point at which the consumption function intersects the 45 degree reference line
A) planned real consumption equals real disposable income.
B) equilibrium output is supply determined equilibrium output is determined by both.
C) planned real saving equals real disposable income.
D) planned real consumption of real disposable income equals zero.

Question

Quizplus · Accepted Answer

At the point where the consumption function intersects the 45 degree reference line, the planned real consumption equals real disposable income. This is because the 45 degree reference line represents the equality between planned real consumption and real disposable income, which is also known as output or gross domestic product (GDP). Therefore, the correct answer is A.

At the Point at Which the Consumption Function Intersects the 45