When the Consumption Function Lies Below the 45° Line, Households

question 73

Multiple Choice

When the consumption function lies below the 45° line, households

• A)are dissaving.
• B)spend all of any increase in disposable income.
• C)consume more than their disposable income.
• D)save all of any increase in disposable income.
• E)are saving some portion of their disposable income.

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Definitions:

Offshoring

The business practice of relocating manufacturing processes or services to another country to reduce costs.

Working Capital

Refers to a company's current assets minus its current liabilities, indicating the liquid capital available for day-to-day operations.

Freight Costs

The charges incurred for transporting goods from one place to another via sea, air, or land carriers.

Decision Tree

A graphical representation used to display the outcomes of various actions and decisions, showing different paths based on decision points.