The consumption function is based on the assumption that as real disposable income rises,aggregate desired consumption
A)will fall and desired saving will rise.
B)will rise and desired saving will fall.
C)and desired saving will both rise.
D)remains constant and desired saving will rise.
E)remains constant and desired saving will fall.

Question

Quizplus · Accepted Answer

The consumption function, based on Keynesian economics, posits that as real disposable income increases, both aggregate desired consumption and desired saving increase. This is because people tend to spend a portion of their additional income and save the rest, leading to increases in both consumption and savings.

The Consumption Function Is Based on the Assumption That as Real