When does the savings curve start from negative Y-axis?

The correct answer is option 3: When consumption is greater than income

The savings curve starts from the negative Y-axis when consumption is greater than income.

Here's why:

• Savings is defined as the difference between income and consumption i.e  Savings=Income−Consumption

• If consumption exceeds income, savings will be negative:

  Negative Savings= (Income−Consumption) < 0
  

Say my income is ₹ 10,000 but my consumption is ₹12,000.

Savings =Y - C.

             = 10,000 – 12,000

              = -₹ 2,000.

There are negative savings of ₹2,000.

Thus, if the consumption function intersects the Y-axis at a point above the origin, it indicates that there are negative savings when income is zero. This situation causes the savings curve to start from the negative Y-axis.