Dissaving occurs when

Question

Quizplus · Accepted Answer

Dissaving occurs when consumption exceeds disposable income, meaning that individuals are spending more than they are earning and are drawing down their savings or going into debt. Option A is incorrect because disposable income exceeding consumption would result in saving, not dissaving. Option C is incorrect as the marginal propensity to save cannot be greater than 1. Option D is incorrect because a marginal propensity to consume of less than 0.5 indicates a high propensity to save, not dissave.

Dissaving Occurs When