Which statement correctly describes the relationship between consumption and income?
A)Consumption is always half of income.
B)Consumption and income are positively related.
C)Income is always less than consumption.
D)Total consumption is independent of income.

Question

Quizplus · Accepted Answer

Consumption and income are positively related, meaning as income increases, consumption also tends to increase. Conversely, if income decreases, consumption tends to decrease as well. This is known as the income-consumption relationship or the consumption function, which shows the amount of consumption that results from a certain level of income. However, it should be noted that this relationship may not hold true for all individuals or households, as personal preferences and circumstances can also impact consumption patterns.

Which Statement Correctly Describes the Relationship Between Consumption and Income