Answer to Question #251074 in Financial Math for Millicent

Question

Which one of the following is NOT a possible relationship between income and spending

Select one:

a. None is a relationship

b. Income is higher than spending

c. Income equals the level of spending

d. Spending is higher than income

Answer 1

In economics, Income = Spending + Savings. The income an individual, or a country, produces is either spend and/or saved. 

As we can see from the relation that income is higher than spending. It will be equal to spending when saving is zero.

If spending is more than income then it will create debt. This is not a relation between income and spending.

Hence, option (d) is the correct.