According to Keynes, planned consumption
A) decreases as disposable income increases.
B) is unstable and fluctuates widely with changes in disposable income.
C) is positively related to real disposable income.
D) is positively related to the interest rate.

Question

Quizplus · Accepted Answer

Keynes believed that planned consumption is positively related to real disposable income. This means that as disposable income increases, people are more likely to spend more on consumption, leading to an increase in planned consumption. Unlike choice B, Keynes did not believe that planned consumption was unstable and fluctuated widely with changes in disposable income. Additionally, Keynes did not believe that planned consumption was positively related to the interest rate (choice D).

According to Keynes, Planned Consumption