The 45-degree line on a graph relating consumption and income shows:

Question

all points where the MPC is constant.

all the points at which consumption and income are equal.

all points at which saving and income are equal.

the amounts households will plan to save at each possible level of income.

Answer 1

The 45-degree line on a graph relating consumption and income shows all the points at which consumption and income are equal.

This line represents situations where total consumption equals total income. For any point along this line, if we were to plot consumption on the vertical axis and income on the horizontal axis, the values of consumption and income would be equal, demonstrating a direct relationship between the two.