When Graphing the Consumption Function, We Include a 45-Degree Reference

question 399

Multiple Choice

When graphing the consumption function, we include a 45-degree reference line. What is TRUE at the points at which the consumption function crosses this line?

• A) Planned real saving is zero.
• B) Planned real consumption spending is zero.
• C) Real disposable income is zero.
• D) Real GDP is zero.

---

Definitions:

Total Revenue

The entire amount of income generated by the sale of goods or services related to a company's primary operations.

Variable Costs

Expenses that change in proportion to the activity of a business, such as costs for raw materials or labor.

Fixed Costs

Fixed Costs are business expenses that do not change with the level of goods or services produced by the company.

Marginal Cost

The additional cost incurred by producing one more unit of a good or service.