Which one of the following statements is MOST accurate?
A) In general, consumption demand rises by less than disposable income.
B) In general, consumption demand rises by more than disposable income.
C) In general, consumption demand rises by more than income.
D) In general, consumption demand rises by the same amount as disposable income rises.
E) In general, consumption demand rises are unrelated to disposable income rises.

Question

Quizplus · Accepted Answer

The statement "In general, consumption demand rises by less than disposable income" is the most accurate as individuals tend to save a portion of their disposable income rather than spending it all on consumption. This implies that there is a positive relationship between disposable income and consumption but the increase in consumption demand is proportionally less than the increase in disposable income.

Which One of the Following Statements Is MOST Accurate