When disposable income is 1,000,C + I is

Question

Quizplus · Accepted Answer

Disposable income (DI) is the money available to households after deducting taxes. If the disposable income is 1,000, it means that the total amount of money that households have to spend or save is 1,000. C + I refers to consumption and investment spending in the economy. It is not possible to determine the exact value of C + I without additional information such as the marginal propensity to consume or the level of investment in the economy. Therefore, we cannot choose option A, B, or D. However, we can say that the total spending in the economy, which is C + I, is likely to be greater than disposable income since households tend to spend more than they earn by borrowing or using their savings. Therefore, the best choice is option C, 1175, as it is the highest value among the options provided.

When Disposable Income Is 1,000,C + I Is