If consumption spending is larger than disposable income,
A) saving is positive.
B) dissaving occurs.
C) saving is exactly zero.
D) a depression results.

Question

Quizplus · Accepted Answer

If consumption spending is larger than disposable income, it means that people are spending more than what they are earning. This leads to a situation called dissaving, where people are essentially spending their savings or taking on debt to maintain their consumption. Therefore, the correct answer is B - dissaving occurs.

If Consumption Spending Is Larger Than Disposable Income