The correct answer is Option 3: 3 and 4
When the consumption function (C) starts from the Y-axis, it indicates the value of consumption when income is zero. The position of the consumption function on the Y-axis reflects autonomous consumption, which is the level of consumption that occurs even when income is zero.
Here's what each statement means in this context:
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Consumption is zero when income is zero - This is not true if the consumption function starts from a point above the origin on the Y-axis. It would be true if the function starts exactly at the origin.
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Saving is positive when income is zero - This is not true. If the consumption function starts from a positive point on the Y-axis, it means that there is consumption even when income is zero. This implies that saving must be negative when income is zero because total savings are calculated as income minus consumption.
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Saving is negative when income is zero - This is true. If the consumption is positive when income is zero, then saving must be negative (since saving = income - consumption).
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Consumption is positive when income is zero - This is true if the consumption function starts above the origin on the Y-axis.
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