The consumption schedule is drawn on the assumption that as disposable income increases consumption will:
A)be unaffected.
B)increase absolutely, but remain constant as a percentage of income.
C)increase absolutely, but decline as a percentage of income.
D)increase absolutely and as a percentage of income.

Question

Quizplus · Accepted Answer

As disposable income increases, consumption increases in absolute terms, but the proportion of income spent on consumption typically decreases because people tend to save a larger portion of their income as it rises.

The Consumption Schedule Is Drawn on the Assumption That as Disposable