When the Consumption Function Lies Above the 45- Degree Line

question 176

Multiple Choice

When the consumption function lies above the 45- degree line, households

• A) save all of any increase in income.
• B) spend on consumption an increasing percentage of any increase in income.
• C) spend on consumption a decreasing percentage of any increase in income.
• D) are dissaving.

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Definitions:

T-statistic

A ratio of the departure of an estimated parameter from its notional value and its standard error.

Directional Hypothesis

A hypothesis that specifies the direction of the expected difference or relationship between variables.

Null Hypothesis

A default statement that indicates no effect or no difference, used as a starting point for statistical hypothesis testing.

Directional Hypothesis

A hypothesis that outlines the anticipated direction of the difference or relationship.