Which statement is consistent with what Keynes believed about consumption and disposable income?
A) Consumption depends upon disposable income and falls as disposable income rises.
B) Consumption rises by the same amount as disposable income rises.
C) Consumption rises by less than disposable income rises.
D) Disposable income depends upon consumption.

Question

Quizplus · Accepted Answer

Keynes believed that as disposable income increases, consumption also increases but at a diminishing rate. This means that while consumption rises with an increase in disposable income, it does so by less than the increase in disposable income.

Which Statement Is Consistent with What Keynes Believed About Consumption