According to Keynesian theory, the most important determinant of saving and consumption is
A)the level of real disposable income.
B)the stock of liquid assets.
C)the stock of durable goods in the consumer's possession.
D)the level of consumer indebtedness.

Question

Quizplus · Accepted Answer

According to Keynesian theory, the level of real disposable income is the most important determinant of saving and consumption. When disposable income rises, consumption also tends to rise, but not as much as income leading to increases in savings.

According to Keynesian Theory, the Most Important Determinant of Saving