The saving function expresses the relationship between
A) personal saving and consumption.
B) gross domestic income and saving.
C) disposable personal income and saving.
D) wage income and personal saving.

Question

Quizplus · Accepted Answer

The saving function typically relates the level of disposable personal income (DPI) to the level of personal saving. This relationship indicates that, as DPI increases, so too does personal saving. However, the marginal propensity to save (MPS) may fall as DPI rises, indicating that households may save a smaller fraction of any additional income. Therefore, as income increases, personal consumption increases, but savings also tends to rise.

The Saving Function Expresses the Relationship Between