When real consumption expenditure is plotted against real disposable income the resulting relationship is
A) very weak.
B) positive and very curvi-linear.
C) positive and very close to linear.
D) negative and very close to linear.
E) virtually flat

Question

Quizplus · Accepted Answer

The relationship between real consumption expenditure and real disposable income is generally positive and very close to linear. This reflects the fact that as disposable income increases, individuals tend to spend more on consumption. However, the relationship may not be perfectly linear because there are other factors that can influence consumption, such as wealth, interest rates, and expectations about future income.

When Real Consumption Expenditure Is Plotted Against Real Disposable Income