An increase in disposable income
A) increases consumption because it shifts the consumption schedule upward.
B) decreases consumption because it shifts the consumption schedule downward.
C) increases consumption by moving upward along a given consumption schedule.
D) decreases consumption by moving downward along a given consumption schedule.

Question

Quizplus · Accepted Answer

An increase in disposable income leads to an increase in consumption, as people have more money to spend. This increase in consumption is reflected by moving upward along a given consumption schedule. Therefore, choice C is the correct answer.

An Increase in Disposable Income