The table given below shows the disposable income and consumption of a household.In the table below,saving:
Table 9.1

A)decreases as disposable income increases.
B)decreases as disposable income decreases.
C)remains constant as disposable income increases.
D)is negative at a disposable income of $1,000.
E)is negative at a disposable income of $1,400.

Question

The table given below shows the disposable income and consumption of a household.In the table below,saving: ​
​Table 9.1
​

A)decreases as disposable income increases. 
B)decreases as disposable income decreases. 
C)remains constant as disposable income increases. 
D)is negative at a disposable income of $1,000. 
E)is negative at a disposable income of $1,400.

Quizplus · Accepted Answer

According to the table, as disposable income decreases from $2,000 to $1,400, consumption decreases from $1,800 to $1,600. This implies that households are saving a portion of their disposable income, resulting in an increase in savings as disposable income decreases. Similarly, as disposable income increases from $1,400 to $2,000, consumption increases from $1,600 to $1,800. This implies that households are saving a smaller portion of their disposable income, resulting in a decrease in savings as disposable income increases. Therefore, option B is correct, as saving decreases as disposable income decreases.

The Table Given Below Shows the Disposable Income and Consumption