Question

The relationship between disposable income, consumption and savings is: A) Yd = C-S B) Yd +...

The relationship between disposable income, consumption and savings is:
A) Yd = C-S
B) Yd + C = S
C) Yd = c*s
D) Yd = C+S
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Answer #1

Option D is the correct answer which is Yd = C+S

Now firstly what is disposable income

Disposable income refers to the total personal income of a person after deductions of taxes . In other words Disposable income, is the amount of money that households have available for spending and saving after income taxes have been accounted for.

So Disposable income includes both savings and consumption as people consume for their needs and save for furture needs or future investments.

hence consumption and savings makes disposable income.

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