Refer to the information provided in Figure below to ANSWER the question that follow

Economics Dec 28, 2020

Refer to the information provided in Figure below to ANSWER the question that follow. Jerry's Consumption Function Jerry's consumption le 45° D Y Yg Jerry's Income Positive saving occurs along the line segment O a. BC. O b. DC. O C. AC. O d. BA.

Expert Solution

Answer C

Positive savings occur when income is greater than the consumption. From the graph, along the line AC the income curve (that is the line passing through origin) is always greater than Jerry's cosumption function. Rest of the line segments, the savings is negative since consumption is higher than the income.

Therefore, the correct answer is option C

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