When C function starts from Y-axis, what does it indicate?

• Consumption is zero when income is zero
• Saving is positive when income is zero
• Saving is negative when income is zero
• Consumption is positive when income is zero

3 and 4

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:

1. 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.

2. 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.

3. 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).

4. Consumption is positive when income is zero - This is true if the consumption function starts above the origin on the Y-axis.