A graphical plot of consumption expenditures against disposable income for the US over the past 20 years shows
A) no apparent relationship between consumption and disposable income
B) consumption remaining roughly constant as disposable income rises
C) consumption falling as disposable income rises
D) consumption rising as disposable income has fallen
E) consumption rising almost proportionately as income rises

Question

Quizplus · Accepted Answer

The graphical plot of consumption expenditures against disposable income for the US over the past 20 years shows a positive linear relationship with a slope of approximately 0.8. This means that consumption expenditures have been rising almost proportionately as disposable income rises.

A Graphical Plot of Consumption Expenditures Against Disposable Income for the US