When disposable income increases, consumption expenditure
A)also increases, but by less.
B)also increases and by more.
C)decreases by the same amount.
D)also increases and by an equal amount.
E)does not change.

Question

Quizplus · Accepted Answer

When disposable income increases, consumption expenditure also increases, but typically by less than the increase in income due to the marginal propensity to consume being less than one.

When Disposable Income Increases, Consumption Expenditure