Question list At any point where the consumption function intersects the 45-degree reference line, C = Y. K O A. False O B. True Question 4 Question list Saving is the portion of K O A. disposable income that is not consumed. O B. disposable income that is consumed. O Question 5 O C. stock of consumption. O D. investment that is spent on machinery. O Question 6 Which of the following statements best reflects the relationship between saving and savings? O A. Saving and savings are both flow variables. O B. Saving is a flow variable; savings is a stock variable. O Question 7 O C. Saving and savings are both stock variables. O D. Saving is the total amount not consumed whereas savings refers to the amount placed into a savings account. Question list is a flow, something that occurs over time. It equals disposable income minus consumption. In contrast, are a stock. They are the accumulation resulting from saving. is also a flow. It includes expenditure on new machines, buildings, and equipment and in business inventories. Question 5 The consumption function shows the relationship between planned rates of real consumption and real per year. The saving function is the complement of the consumption function because real saving plus real must equal real disposable income. Question 6 The propensity to consume is equal to real consumption divided by real disposable income. The propensity to save is equal to real saving divided by real disposable income. The propensity to consume is equal to the change in planned real consumption divided by the change in real disposable income. The propensity to save is equal to the change in planned Question 7 real saving divided by the change in real disposable income. Any change in real disposable income will cause the planned rate of consumption to change. This is represented by a the consumption function. Any change in a nonincome determinant of consumption will cause a the consumption function. O Question 8