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

question 140

Multiple Choice

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

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

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Definitions:

Unconscious

Pertaining to the part of the mind that is inaccessible to the conscious mind but that affects behaviors and emotions.

Superego

In psychoanalytic theory, the part of the mind that acts as a self-critical conscience, reflecting social standards learned from parents and authority figures.

Ego

In psychoanalytic theory, the part of the psyche that mediates between the primal desires of the id and the moral demands of the superego.

Problem-Solving Skills

The ability to identify, define, and resolve problems through the application of appropriate strategies and critical thinking.