The saving schedule is such that as aggregate income increases by a certain amount, saving:
A)increases by the same amount as the increase in income.
B)does not change.
C)increases.
D)decreases.

Question

Quizplus · Accepted Answer

According to the saving schedule, as aggregate income increases, saving also increases but not by the same amount as the increase in income. This is because individuals tend to spend a certain portion of their increase in income, known as the marginal propensity to consume (MPC), and save the rest. Therefore, the increase in saving is less than the increase in income.

The Saving Schedule Is Such That as Aggregate Income Increases