If consumption is greater than disposable income,it follows that
A) interest rates are rising.
B) the budget deficit is shrinking.
C) saving is negative.
D) the multiplier is inoperative.
E) none of the above

Question

Quizplus · Accepted Answer

If consumption exceeds disposable income, it means that people are spending more than what they earn, which implies negative saving. Thus, the correct answer is C. A) is incorrect since there is no information provided about interest rates. B) is also incorrect since the deficit would not necessarily shrink in this situation. D) is irrelevant to the question.

If Consumption Is Greater Than Disposable Income,it Follows That