Question:
Study the following figure carefully and choose the correct alternative to fill in the blank:
Study the following figure carefully and choose the correct alternative to fill in the blank:
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The consumption function shows the relationship between income and consumption, not savings.
Updated On: Jan 30, 2025
- Investments
- Trade of Services
- External Borrowings
- External Assistance
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The Correct Option is B
Solution and Explanation
This is true because the consumption function consists of two components:
Autonomous Consumption: The minimum level of consumption that occurs even when income is zero.
Induced Consumption: The component of consumption that varies with changes in income.
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