404) Suppose we draw the consumption function for a two-sector economy, with disposable income, YDIS, on the horizontal axis and planned consumption, C, on the vertical axis. Suppose we also add a 45 degree line through the origin, and find that the consumption
Answer is:
The consumption function must be a straight line.
Related Micro Economics MCQ (GK Set-1) with Answers
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A fall in interest rates
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An increase in induced consumption would make the W line flatter
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X
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