The Keynesian consumption function implies that at a given moment persons with high incomes are saving ________ persons with low incomes,a prediction which is ________ by actual cross-section consumption data.
A)a lower fraction of income than,confirmed
B)a lower fraction of income than,not confirmed
C)a higher fraction of income than,confirmed
D)a higher fraction of income than,not confirmed
E)the same fraction of income as,confirmed

Question

Quizplus · Accepted Answer

The Keynesian consumption function suggests that as income increases, the proportion of income saved increases. This is because as people earn more, they can afford to save more after meeting their consumption needs. This prediction is confirmed by actual cross-section consumption data, which generally shows that higher-income individuals save a higher fraction of their income compared to lower-income individuals.

The Keynesian Consumption Function Implies That at a Given Moment