Practicing Success

Target Exam

CUET

Subject

Economics

Chapter

Macro Economics: Determination of Income and Employment

Question:

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
Options:

1 and 2

2 and 3

3 and 4

All the statements are true

Correct Answer:

3 and 4

Explanation:

Consumption function starting from Y-axis indicates that there is autonomous consumption. It is that consumption which is independent to income, which means it happens at 0 level of income. This consumption is done with the past savings of the individual.