What are the relationships among consumption, saving, and disposable income?
What will be an ideal response?
Disposable income equals consumption plus saving. If consumption is less than disposable income, the difference is saving. There is a positive or direct relationship between consumption and disposable income (after-tax income) because as disposable income increases so does consumption. There is a positive relationship between saving and disposable income because as disposable income rises so does saving. Disposable income is the most important determinant of both consumption and saving.
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Concerning an investment project which of the following is TRUE?
A) A risk-neutral individual is more likely to invest than a risk-averse individual. B) A risk-neutral individual is more likely to invest than a risk-loving individual. C) A risk-neutral individual is less likely to invest than a risk-averse individual. D) Not enough information is given.
Modern paper money is fiat money because it is backed only by the faith the holder has in the government that issued it
a. True b. False Indicate whether the statement is true or false