In a one-period economy
A)consumption equals disposable income plus the value of non-market work.
B)consumption equals disposable income.
C)consumers may increase their consumption by borrowing.
D)consumers save more than they consume.
E)savings is always positive.

Question

Quizplus · Accepted Answer

In a one-period economy, there is no borrowing or saving across time periods. Therefore, consumption equals disposable income, and there is no opportunity for consumers to save or borrow. Option A is incorrect because non-market work is not part of disposable income, which only includes income earned from market transactions. Option C is incorrect because there is no borrowing in a one-period economy. Option D is incorrect because there is no saving in a one-period economy; all income is either consumed or used to purchase non-market goods and services. Option E is incorrect because savings is not applicable in a one-period economy.

In a One-Period Economy