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Aggregate Demand, Consumption & Saving · Question 11 of 60

The graph shows a consumption function and the 45° line.

Question 11

MediumOriginal question

The graph shows a consumption function and the 45° line. What is autonomous consumption?

A consumption line C = 40 + 0.75Y starting at ₹40 crore on the vertical axis, and a dashed 45° line from the origin. They cross at B, where income and consumption are both ₹160 crore. At K, income is ₹400 crore and consumption ₹340 crore.
Options for question 11

Show the answer and explanation
CorrectNot quiteAnswer A

Correct answer: A

Explanation

  1. Autonomous consumption is where the C line meets the vertical axis, at zero income.

  2. The graph shows ₹40 crore.

Concept
Reading autonomous consumption
Typical time
70 s
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The rule this testsThe consumption function
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