In the Graph for the Consumption Function, the 45-Degree Line

question 162

Multiple Choice

In the graph for the consumption function, the 45-degree line

• A) contains only a consumption component.
• B) represents both planned consumption and planned investment.
• C) shows various combinations where planned consumption equals real disposable income.
• D) reflects a decreasing APC as real disposable income rises.

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Definitions:

Mental Process

Operations of the mind involving thinking, perceiving, remembering, and understanding, often influencing behavior.

Investigator

A person who carries out a systematic inquiry or study to discover facts or information.

Illusory Correlation

is the perception of a relationship between two variables even when no such relationship exists.

Premonition

A strong feeling that something is about to happen, especially something unpleasant.