The saving function shows
A) the amount of saving at each level of aggregate demand, holding all other determinants of saving constant.
B) the amount of saving on at each level of disposable income, holding all other determinants of saving constant.
C) the amount of saving at each price level, holding all other determinants of saving constant.
D) the amount of saving at each wage rate, holding all other determinants of saving constant.

Question

Quizplus · Accepted Answer

The saving function shows the amount of saving at each level of disposable income, holding all other determinants of saving constant. This is because disposable income is the primary determinant of saving, and as it increases, people tend to save more. Holding other factors (such as interest rates and wealth) constant, the saving function reflects this relationship between disposable income and saving.

The Saving Function Shows