As Disposable Income Increases, Consumption

question 74

Multiple Choice

As disposable income increases, consumption

• A) and saving both increase.
• B) and saving both decrease.
• C) decreases and saving increases.
• D) increases and saving decreases.

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Definitions:

Private Domestic Investment

Expenditures by private (non-government) entities on domestic capital goods, including constructions and equipment, to produce goods and services in the future.

Great Recession

A significant decline in economic activity across the globe that occurred between 2007 and 2009, widely considered the largest downturn since the Great Depression.

Expected Profit Rate

The anticipated return on investment, calculated based on projected incomes and the inherent risks associated with an investment.

Interest Rate

A fee, denoted as a percentage of the principal sum, that a lender demands from a borrower to use assets.