Which of the following statements is TRUE?
A) investment = disposable income + consumption
B) saving = personal income - consumption
C) saving = disposable income - consumption
D) saving = personal income + consumption

Question

Quizplus · Accepted Answer

Saving is defined as the part of disposable income that is not consumed, so the correct formula should be saving = disposable income - consumption. Option A and D are incorrect as investment is not equal to disposable income plus consumption or personal income plus consumption. Option B is also incorrect as personal income does not account for taxes and other deductions that reduce disposable income.

Which of the Following Statements Is TRUE