Question

In Exhibit 18-9, when disposable income is equal to zero, saving is equal to:


$0.


$100.


-s$50.


-$100.


$50.

Answer 1

Saving = disposable income − consumption. If disposable income is zero, saving equals −(autonomous consumption). From the exhibit autonomous consumption is $100, so saving = 0 − 100 = −$100.