The relationship between consumption and disposable income is such that as
A)consumption rises, disposable income falls.
B)disposable income rises, consumption rises.
C)disposable income rises, consumption falls.
D)disposable income rises, saving falls.

Question

Quizplus · Accepted Answer

Disposable income is the money available to individuals after taxes have been deducted from their income. When disposable income increases, people have more purchasing power to spend on goods and services, which leads to an increase in consumption. Therefore, as disposable income rises, consumption also rises.

The Relationship Between Consumption and Disposable Income Is Such That