As disposable income goes up, the
A) average propensity to consume falls.
B) average propensity to save falls.
C) volume of consumption declines absolutely.
D) volume of investment diminishes.

Question

Quizplus · Accepted Answer

When disposable income increases, individuals have more money to spend and save. The average propensity to consume (APC), which is the fraction of income spent, typically falls because as people earn more, they tend to save a higher proportion of their income, rather than spending all of it.

As Disposable Income Goes Up, the