The amount of consumption in an economy correlates:
A) Inversely with the level of disposable income
B) Directly with the level of disposable income
C) Directly with the level of saving
D) Directly with the rate of interest

Question

Quizplus · Accepted Answer

Disposable income is the income available after taxes are deducted from income. When disposable income increases, it leads to an increase in consumption expenditure as people have more money to spend on goods and services. Therefore, consumption in an economy is directly proportional to the level of disposable income.

The Amount of Consumption in an Economy Correlates