As Disposable Income Decreases, Consumption

question 132

Multiple Choice

As disposable income decreases, consumption:

• A)increases.
• B)decreases.
• C)may either increase or decrease depending on the mpc.
• D)may either increase or decrease depending on the wealth effect.

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Definitions:

Invest

To assign funds with the anticipation of obtaining future gains, like earnings or financial returns.

Saves

In finance, the amount of money that is set aside from income, typically in a savings account or other forms of secure investment.

Retirement Plan

A financial strategy that intends to provide individuals with income or resources during their retirement years.

Deposited

The action of placing money into a financial account or institution for safekeeping or to earn interest.