The Figure Given Below Represents the Saving Function of an Economy

question 3

Multiple Choice

The figure given below represents the saving function of an economy.
Figure 9.1

-Refer to Figure 9.1. Which of the following statements is true for real GDP levels below $400 billion?

• A) Saving exists because consumption is smaller than disposable income.
• B) Saving does not exist because consumption exceeds disposable income.
• C) The corresponding section of the consumption function lies below the 45-degree line.
• D) Autonomous consumption is equal to zero.
• E) The slope of the consumption function becomes negative.

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Definitions:

Bundle

A collection of items or services sold and purchased together.

Violates WARP

Refers to a consumer's choices that contradict the Weak Axiom of Revealed Preference, indicating inconsistencies in preference orderings.

Bundle

A combination of various goods and services that a consumer can choose to consume, given their income and preferences.

Entertainment

Activities, performances, or media produced to provide enjoyment and amusement to individuals or groups.