Based on our understanding of consumption and saving, we know that the propensity to consume and the propensity to save must:

Question

Quizplus · Accepted Answer

The propensity to consume (C) and the propensity to save (S) are two opposite components of disposable income. Since disposable income (Yd) is the sum of these two components (C + S = Yd), the two propensities must sum up to exactly one (1). Therefore, the correct choice is C- sum to exactly one.

Based on Our Understanding of Consumption and Saving, We Know