With Consumption Expenditure on the Vertical Axis and Disposable Income

question 315

Multiple Choice

With consumption expenditure on the vertical axis and disposable income on the horizontal axis, the consumption function intersects the 45-degree line at $8 trillion. This result indicates that

• A) autonomous consumption spending is $8 trillion.
• B) consumption spending is $8 trillion when disposable income is $8 trillion.
• C) consumption spending is less than $8 trillion because taxes must be paid.
• D) consumption spending is more than $8 trillion because taxes have been paid.

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