Asked by Colleen Tercek on May 09, 2024
Verified
Which statement is not true?
A) Induced consumption is never negative.
B) Autonomous consumption is constant.
C) When C is positive,saving is negative.
D) When consumption is smaller than disposable income,saving is positive.
E) Each statement is true.
Induced Consumption
The portion of consumption that changes as a result of changes in income, with higher incomes leading to increased consumption.
Autonomous Consumption
The amount of consumption that occurs regardless of current income levels, reflecting basic spending needed to survive.
Saving
The portion of income not spent on consumption but kept aside for future use, which may be invested to generate wealth.
- Distinguish between autonomous and induced consumption.
Verified Answer
MN
mehdi nickoueiMay 14, 2024
Final Answer :
C
Explanation :
When C is positive, saving is not necessarily negative. If disposable income is also positive and consumption is less than disposable income, saving will be positive.
Learning Objectives
- Distinguish between autonomous and induced consumption.