At the Point Where the Consumption Function Crosses the 45-Degree

question 8

Multiple Choice

At the point where the consumption function crosses the 45-degree line:

• A)consumption is equal to disposable income, and therefore, saving is zero.
• B)consumption is less than income, and saving is present.
• C)consumption is greater than income, and dissaving is present.
• D)planned saving equals actual saving minus disposable income.

---

Definitions:

Loan Collateral

Assets or property pledged by a borrower to secure a loan, serving as a guarantee for the lender that the loan will be repaid.

Liquidation Value

The estimated total value of a company's physical assets if it were to be terminated and the assets sold, typically assessed in the context of a business facing bankruptcy.

Diversify Risk

The strategy of spreading investments across various sectors or assets to reduce the overall risk exposure.

Operating Leases

Agreements that allow one to use an asset for a specified period without owning it, typically with lower monthly payments than a finance lease.