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What is saving at a point where income equals consumption on the 45° line?

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Question

What is saving at a point where income equals consumption on the 45° line?

Options

  • Saving is positive.

  • Saving equals autonomous consumption.

  • Saving is zero.

  • Saving equals MPC.

MCQ
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Solution

On the 45° line, \[C=Y\]. Since all income is consumed, there is no saving, so saving equals zero.

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