Experts what is the answer of ths question
1- What does the shaded area of AOB indicate ?
2- What is the significance of point B ?
Solution:
(i) AOB area as shown in above diagram is negative savings when income is zero than autonomous consumption is used and saving curve negative intercept is same as consumption curve positive intercept.
(ii) Point B is the break even point when consumption is equal to income and saving is 0. After point B saving will be positive with increased income.
(i) AOB area as shown in above diagram is negative savings when income is zero than autonomous consumption is used and saving curve negative intercept is same as consumption curve positive intercept.
(ii) Point B is the break even point when consumption is equal to income and saving is 0. After point B saving will be positive with increased income.