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

Question

Quizplus · Accepted Answer

The consumption function shows the relationship between consumption expenditure and a determining variable, which is usually disposable income. A positive (direct) relationship exists between consumption expenditure and disposable income, indicating that as disposable income increases, consumption expenditure also increases.

A Consumption Function Shows a