Which must be true when consumption exceeds income?
A)the consumption function shifts upward
B)the consumption function shifts downward
C)aggregate expenditures equal real GDP
D)saving must be negative
E)aggregate expenditures will fall

Question

Quizplus · Accepted Answer

When consumption exceeds income, it means that individuals are spending more than what they earn, which results in negative savings. Therefore, option D is the correct choice. The consumption function shifting upward or downward or aggregate expenditures being equal to real GDP or falling may or may not be true in this situation depending on other factors such as government spending, investment, and net exports.

Which Must Be True When Consumption Exceeds Income