AP Macroeconomics Question 434: Answer and Explanation
Use your browser's back button to return to your test results.
9. In a private closed economy, which of the following statements is true?
- A. Household saving can never be negative.
- B. Investment is always greater than savings.
- C. The economy is in equilibrium when consumption equals saving.
- D. Saving is equal to zero when consumption equals disposable income.
- E. Government is the only source of spending and investment.
Correct Answer: D
D-Consumption spending is equal to disposable income minus saving: C = DI – S.