The saving function shows the relationship between saving and _______, other things remaining the same.
A)disposable income
B)the price level
C)the interest rate
D)consumption
E)nominal income

Question

Quizplus · Accepted Answer

The saving function is typically drawn assuming all other factors remain constant, so the correct answer is A) disposable income. As disposable income increases, people tend to save more. The price level (B) is not usually considered in the saving function, nor is nominal income (E); while the interest rate (C) is associated with saving, it is not the only factor, and it is not held constant in the saving function. Consumption (D) is related to saving, but it is the dependent variable in the consumption function, not the independent variable in the saving function.

The Saving Function Shows the Relationship Between Saving and _______