Along the 45-Degree Line in the Graph of Consumption and Disposable

question 22

Multiple Choice

Along the 45-degree line in the graph of consumption and disposable income

• A) consumption is equal to disposable income.
• B) consumption is equal to total saving.
• C) consumption is equal to marginal saving.
• D) the interest rate is zero.

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Definitions:

Consumer Price Index

The most important measure of inflation. This tells us the percentage rise in the price level since the base year, which is set at 100; represented by CPI.

Effective Minimum Wage

The lowest wage that an employer can legally pay an employee, adjusted for factors such as living costs and inflation.

Equilibrium Level

The state in an economy or market where supply equals demand, and there is no inherent force to change the price or quantity.

Real Wages

The purchasing power of wages, adjusted for inflation, representing the quantity of goods and services that can be bought.