Question 1
If the consumption function is below the 45-degree line
◦ consumption is less than income and saving is positive.
◦ consumption is less than income and saving is negative.
◦ consumption exceeds income and saving is positive.
◦ consumption exceeds income and saving is negative.
Question 2
Refer to the information provided in Figure 23.5 below to answer the question(s) that follow.
Refer to Figure 23.5. The
MPS for this saving function is
◦ 5.
◦ 4.
◦ 0.5.
◦ 0.25.