Question

What is the difference between income and consumption called?

• A. Production
• B. Saving
• C. Exchange
• D. Distribution

Hint:

Formula: Saving = Income – Consumption.

Answer 1

The Correct Option is B

Step 1: Key definition.
Income is the total money earned, while consumption is the part of income spent on goods and services.
Step 2: Difference.
The remaining portion of income after consumption is called Saving.
Step 3: Analyzing the options.
(A) Production: Refers to creation of goods, not related.
(B) Saving: Correct — difference between income and consumption.
(C) Exchange: Refers to trade, not correct.
(D) Distribution: Refers to allocation of income among factors, not relevant.
Step 4: Conclusion.
Thus, the difference between income and consumption is called Saving.