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The slope of the saving function gives the
  • a)
    The amount of savings done when there is high level of income.
  • b)
    The amount of dissavings done when there is zero level of income.
  • c)
    Increase in savings per unit increase in the income.
  • d)
    The amount of dissavings done when there is high level of income.
Correct answer is option 'C'. Can you explain this answer?
Most Upvoted Answer
The slope of the saving function gives thea)The amount of savings done...
Explanation:

The saving function is a mathematical representation of the relationship between income and saving. It shows how much individuals and households save at different levels of income. The slope of the saving function represents the rate at which saving changes with respect to changes in income. In other words, it shows how much additional saving is done for each additional unit of income.

The correct answer is option 'C' - Increase in savings per unit increase in income.

Explanation in detail:

1. The saving function:
The saving function is typically represented as S = f(Y), where S is saving and Y is income. It shows the relationship between income and saving. At lower levels of income, individuals may have little or no saving, while at higher levels of income, they may save more.

2. The slope of the saving function:
The slope of the saving function represents the change in saving for a given change in income. It is calculated as the ratio of the change in saving to the change in income. Mathematically, it is expressed as ΔS/ΔY.

3. Increase in savings per unit increase in income:
When the slope of the saving function is positive, it means that saving increases as income increases. This implies that for each additional unit increase in income, there is an increase in saving.

4. Interpretation of the slope:
The slope of the saving function gives us information about the marginal propensity to save (MPS). MPS is the proportion of additional income that is saved. It represents the change in saving per unit change in income.

5. Relationship to options:
Option 'A' states that the slope of the saving function gives the amount of savings done when there is a high level of income. This is incorrect because the slope represents the change in saving, not the absolute amount of saving.

Option 'B' states that the slope of the saving function gives the amount of dissavings done when there is zero level of income. This is incorrect because the slope represents the change in saving, not the amount of dissaving.

Option 'D' states that the slope of the saving function gives the amount of dissavings done when there is a high level of income. This is incorrect because the slope represents the change in saving, not the amount of dissaving.

Therefore, the correct answer is option 'C' - Increase in savings per unit increase in income, as it accurately describes the interpretation of the slope of the saving function.
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