Consumption depends ______ on disposable income, and investment depends ______ on the real interest rate.

Consumption is generally understood to have a positive relationship with disposable income. This means that as disposable income increases, consumption typically increases as well, because people have more resources available to spend on goods and services. This principle is based on the idea that individuals tend to consume a proportion of their income, leading to higher consumption levels with higher disposable income.

On the other hand, investment tends to have a negative relationship with the real interest rate. When the real interest rate is high, the cost of borrowing increases, which can discourage businesses and individuals from investing, as the higher cost makes new projects less financially attractive. Conversely, lower real interest rates reduce borrowing costs, encouraging investment because it becomes more affordable for businesses to finance expansion or new ventures.

Thus, describing the relationship between consumption and disposable income as positive and the relationship between investment and the real interest rate as negative accurately reflects economic theory and the typical behavior observed in real-world scenarios.