When the Consumption Schedule Lies Below the 45-Degree Reference Line

question 190

Multiple Choice

When the consumption schedule lies below the 45-degree reference line, saving

• A) must be negative.
• B) is zero.
• C) is positive.
• D) is negatively sloped.

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Definitions:

Consolidated Cost

The combined cost of an asset that includes the purchase price and all costs necessary to prepare the asset for its intended use, within a group of consolidated companies.

Cost Method

An accounting method used for investments, where the investment is recorded at cost and adjusted only for dividends received.

Consolidated Financial Statements

Financial reports that aggregate the financial position, results of operations, and cash flows of a parent company and its subsidiaries.

Elimination Entry

An accounting entry made in preparing consolidated financial statements to remove the effects of intercompany transactions.