Identify, what does the shaded area (change in EFG), in the given figure indicate?
I. Consumption > Income
II. Saving = Zero (0)
III. Consumption < Income
IV. Saving < Zero (0)
Identify, what does the shaded area (change in EFG), in the given figure indicate?
I. Consumption > Income
II. Saving = Zero (0)
III. Consumption < Income
IV. Saving < Zero (0)
Show Hint
- I and II
- II and III
- III and IV
- I and IV
The Correct Option is B
Solution and Explanation
The shaded area (EFG) typically represents a situation where savings are zero or negative, and consumption is either greater than or less than income:
II: Saving = Zero (0): At the equilibrium point where consumption equals income, savings are zero.
III: Consumption < Income: When the shaded area shows consumption below income, it indicates that savings are positive (but might be in a negative savings area in other sections).
Therefore, the correct options are (B) II and III or (C) III and IV.
Conclusion: The shaded area indicates either zero savings or a situation where consumption is less than income, leading to a negative savings situation.
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