The Relationship Between Consumption and Disposable Income Is Such That

question 31

Multiple Choice

The relationship between consumption and disposable income is such that as

• A)consumption rises, disposable income falls.
• B)disposable income rises, consumption rises.
• C)disposable income rises, consumption falls.
• D)disposable income rises, saving falls.

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Definitions:

Price

The amount of money or value exchanged for the provision or acquisition of a good or service.

Surplus Amount

The excess of quantity supplied over quantity demanded in a market, often leading to lower prices.

Inferior Good

A type of good for which demand decreases as the income of the consumer increases.

Income Increases

The rise in the amount of money received, typically on a regular basis, for work or through investments.