Explain why an upward shift of the consumption schedule typically involves an equal downshift of the saving schedule What is the exception to this relationship?

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1250133

2026-04-22 04:35

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An upward shift of the consumption schedule indicates that consumers are spending more at every income level, which typically leads to a corresponding downshift in the saving schedule since savings are derived from disposable income after consumption. When consumers increase their consumption, they reduce the portion of their income allocated to savings. The exception to this relationship occurs when there is an increase in income that is not fully spent, such as during a period of economic growth where consumers may choose to save a larger fraction of their increased income.

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