Answer to Question #80622 in Macroeconomics for AYANDA

Question

Which of the following statements is correct regarding consumption and saving in the Keynesian mode?

1) If autonomous consumption decreases, consumption spending will remain the same, Ceteris paribus.
2) An increase in consumption spending will result in a proportional increase in saving.
3) If the initial income is zero, the total consumption will be equal to total saving.
4) If total consumption exceeds total income, this is an indication of dissaving.

Answer 1

4) If total consumption exceeds total income, this is an indication of dissaving. It means that households are spending more than their current incomes.