Questions: The consumption schedule shows the relationship of household consumption to the level of
saving.
investment.
disposable income.
the marginal propensity to consume.
Transcript text: The consumption schedule shows the relationship of household consumption to the level of
saving.
investment.
disposable income.
the marginal propensity to consume.
Solution
Answer
The answer is disposable income.
Explanation
Option 1: Saving
The consumption schedule does not directly show the relationship between household consumption and saving. Instead, saving is typically derived from the difference between disposable income and consumption.
Option 2: Investment
The consumption schedule is not primarily concerned with investment. Investment is more related to business expenditures on capital goods rather than household consumption.
Option 3: Disposable income
The consumption schedule illustrates how household consumption varies with changes in disposable income. As disposable income increases, household consumption typically increases as well, reflecting the direct relationship between these two variables.
Option 4: The marginal propensity to consume
While the marginal propensity to consume (MPC) is related to the consumption schedule, it is a measure of the change in consumption resulting from a change in disposable income, rather than the overall relationship between the two. The consumption schedule itself shows the broader relationship between total consumption and total disposable income.