In the above figure, saving will equal zero when real disposable ...

[oliviahorn72]

In the above figure, saving will equal zero when real disposable income equals
 
  A) 500. B) 600. C) 60. D) 0.

Question 2

Refer to the above figure. Suppose that the economy was originally at point A, and then it reached point C by means of a fiscal policy action. Which of the following is correct?
 
  A) Point C is both a short-run equilibrium and a long-run equilibrium that could have been attained through an increase in government spending.
  B) Point C is a short-run equilibrium that could have been attained through a reduction in government spending, but in the long run the economy will end up at point B.
  C) Point C is a short-run equilibrium that could have been attained through a tax cut, but in the long run the economy will end up at point B.
  D) Point C is a long-run equilibrium that could have been attained through a tax increase, although reaching this point first required a short-run equilibrium at point B.

[jgranad15]

Answer to Question 1

B

Answer to Question 2

C