Dissaving occurs when
A)disposable income exceeds consumption.
B)disposable income is less than consumption.
C)the marginal propensity to save is less than .5.
D)the marginal propensity to consume is less than .5.

Question

Quizplus · Accepted Answer

Dissaving occurs when disposable income is less than consumption, meaning that individuals are spending more than they earn and are either dipping into savings or borrowing money to make up the difference. Option A is incorrect because if disposable income exceeds consumption, then there is money left over to save. Options C and D are irrelevant to the definition of dissaving.

Dissaving Occurs When