On a Graph of a Consumption Function, What Is the Significance

question 51

Multiple Choice

On a graph of a consumption function, what is the significance of the 45- degree line?

• A)Desired consumption is zero at all points along the 45- degree line.
• B)It shows the slope of the average consumption function, against which we measure other consumption functions.
• C)It connects all points where desired consumption equals desired saving.
• D)It connects all points where desired consumption equals desired expenditure.
• E)It connects all points where desired consumption equals actual disposable income.

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Definitions:

Planning Budget

A budget prepared for a specific level of activity, outlining expected revenues, expenses, and resource requirements.

Employee Salaries

Regular payments made to employees for performing their job duties.

Service Company

A business that earns revenue by providing intangible products or services, as opposed to selling physical goods.

Indirect Labor

The labor costs of janitors, supervisors, materials handlers, and other factory workers that cannot be conveniently traced to particular products.