when disposable income increases from $0 to $40 billion\na. saving increases by $0.10 for each additional…

when disposable income increases from $0 to $40 billion\na. saving increases by $0.10 for each additional dollar of disposable income.\nb. consumption also increases by $40 billion.\nc. saving grows at a faster pace than consumption.\nd. savings equals zero.

when disposable income increases from $0 to $40 billion\na. saving increases by $0.10 for each additional dollar of disposable income.\nb. consumption also increases by $40 billion.\nc. saving grows at a faster pace than consumption.\nd. savings equals zero.

Answer

Brief Explanations:

When disposable income is $0$, there is no income available for saving. As disposable income starts to increase from $0$ to $40$ billion, initially, with no income at the start - point, savings must be zero. There is no information given about the marginal propensity to save (A is not confirmed), and we don't know if consumption increases by the full amount of the increase in disposable income (B is not confirmed), nor do we have information to compare the growth rates of saving and consumption (C is not confirmed).

Answer:

D. savings equals zero.