Based on Engel's law, what happens to the proportion of income allocated to various spending categories as income increases?

Show Answers

The share of income dedicated to food grows largerThe portion of income used for housing expandsThe fraction of income spent on non-food items risesThe amount saved stays unchanged relative to income

Explanation

Engel's law states that as a person's income increases, the percentage of income spent on food decreases, while the share spent on other categories, such as luxury goods and services, increases. Therefore, the correct answer is that the proportion of income spent on other categories grows with rising income.