A consumption function shows a
A) negative inverse) relationship between consumption expenditure and disposable income.
B) positive direct) relationship between consumption expenditure and price level.
C) negative inverse) relationship between consumption expenditure and saving.
D) positive direct) relationship between consumption expenditure and disposable income.

Question

Quizplus · Accepted Answer

A consumption function shows a positive direct relationship between consumption expenditure and disposable income. This means that as disposable income increases, consumers tend to spend more, leading to an increase in consumption expenditure. The other choices are incorrect as they show either a negative relationship or a relationship with a different variable (price level or saving) instead of disposable income.

A Consumption Function Shows a