Question

If, for a given disposable income level, the disposable income line lies above the consumption curve, saving:


equals consumption.


equals disposable income.


is less than zero.


is equal to zero.


is greater than zero.

Answer 1

is greater than zero.

Explanation: Saving = Disposable income − Consumption. If the disposable income (45°) line lies above the consumption curve at that income, disposable income > consumption, so saving > 0.