The table given below shows the disposable income and consumption of a household. In the table below, saving:
A) decreases as disposable income increases.
B) decreases as disposable income decreases.
C) remains constant as disposable income increases.
D) is negative at a disposable income of $1,000.
E) is negative at a disposable income of $1,400.

Question

The table given below shows the disposable income and consumption of a household. In the table below, saving:  
A) decreases as disposable income increases. 
B) decreases as disposable income decreases. 
C) remains constant as disposable income increases. 
D) is negative at a disposable income of $1,000. 
E) is negative at a disposable income of $1,400.

Quizplus · Accepted Answer

From the table, we can see that as disposable income decreases, consumption decreases at a faster rate than disposable income, causing saving to decrease. Conversely, as disposable income increases, consumption increases at a faster rate than disposable income, causing saving to increase. Therefore, saving decreases as disposable income decreases, making B the right answer.

The Table Given Below Shows the Disposable Income and Consumption