Consumption plus saving equals disposable income at every level of real GDP demanded.

Question

Quizplus · Accepted Answer

This statement is consistent with the basic macroeconomic identity of GDP, which is defined as the sum of consumption, investment, government spending, and net exports. Disposable income is the total amount of income that households have available to either save or spend after paying taxes. Therefore, by definition, consumption plus saving must equal disposable income at every level of real GDP demanded.

Consumption Plus Saving Equals Disposable Income at Every Level of Real