Question

Identify, what does the shaded area (change in EFG), in the given figure indicate?
 

I. Consumption > Income 
II. Saving = Zero (0) 
III. Consumption < Income
IV. Saving < Zero (0)

• A. I and II
• B. II and III
• C. III and IV
• D. I and IV

Hint:

Shaded areas in consumption-savings graphs typically represent points where savings are either zero or negative, indicating consumption patterns relative to income.

Answer 1

The Correct Option is B

The shaded area (EFG) typically represents a situation where savings are zero or negative, and consumption is either greater than or less than income:
- II: Saving = Zero (0): At the equilibrium point where consumption equals income, savings are zero.
- III: Consumption < Income: When the shaded area shows consumption below income, it indicates that savings are positive (but might be in a negative savings area in other sections). 
Therefore, the correct options are (B) II and III or (C) III and IV. 
Conclusion: The shaded area indicates either zero savings or a situation where consumption is less than income, leading to a negative savings situation.