For Levels of Disposable Income to the Left of the Point

question 79

Multiple Choice

For levels of disposable income to the left of the point where consumption intersects the 45-degree line

• A)Saving is negative.
• B)Disposable income exceeds consumption.
• C)Saving equals disposable income.
• D)Consumption equals disposable income.
• E)Saving equals consumption.

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Definitions:

Capital Goods

Long-lasting goods acquired or created by businesses to produce other goods or services, including machinery, buildings, and equipment.

Consumer Goods

Products that are purchased for consumption by the average consumer, including durable goods, non-durable goods, and services.

Production

The process of creating goods and services, involving the transformation of inputs, like labor and raw materials, into outputs that satisfy consumer demand.

Gross Private Investment

The total amount of private sector spending on the acquisition of capital goods and additions to inventories.