Test Index

JAMB Economics 2019 Paper

Question : 10

Total: 80

An economy in which the whole income is not consumed is referred to as______

Solution:

Concept:

An economy where part of income is saved rather than spent on consumption is described as a frugal economy.

Explanation:

If total income is

Y

, and it is not all consumed, then part is saved or invested.

This can be written as

Y = C + S

Y = C + I

Here,

C

is consumption,

S

is saving, and

I

is investment.

A frugal economy avoids spending the entire income and instead sets aside a portion for the future.

Thus, the correct term for an economy where whole income is not consumed is a frugal economy.

Answer:

A. Frugal economy

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