OUTLINE THE STEPS TAKEN IN DERIVING CONSUMPTION CURVE FROM SAVING CURVE.USE DIAGRAM.
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Steps taken for derivation of consumption curve are:
(i) At zero level of income, the savings are $O\overline{S}$ which is the amount of autonomous consumption at Y= 0. So, -$O\overline{S}$ = $O\overline{C}$. Hence, the consumption will start from the point $\overline{C}$.
(ii) We draw a 45° line passing through the origin which shows that C = Y. This is the income line.
(iii) Now, we draw a vertical line from the point E, where saving is zero. At zero level of saving, C = Y. So, B is the break-even point.
(iv) The consumption curve is derived meeting C and B and extending it forward I hope u marks as...
(i) At zero level of income, the savings are $O\overline{S}$ which is the amount of autonomous consumption at Y= 0. So, -$O\overline{S}$ = $O\overline{C}$. Hence, the consumption will start from the point $\overline{C}$.
(ii) We draw a 45° line passing through the origin which shows that C = Y. This is the income line.
(iii) Now, we draw a vertical line from the point E, where saving is zero. At zero level of saving, C = Y. So, B is the break-even point.
(iv) The consumption curve is derived meeting C and B and extending it forward I hope u marks as...
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