Define autonomous consumption and explain how it is represented on a consumption function graph
What will be an ideal response?
Autonomous consumption is the consumption expenditure that occurs when disposable income is zero. This situation is possible only in the short run because people can either spend past savings or borrow. The amount of autonomous consumption is shown by the vertical intercept of the consumption function.
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In the Cournot model, each firm assumes that its rival will ____ its output when the firm adjusts its own output. Which word best completes the sentence?
a. increase b. not change c. decrease d. adjust
______________ stabilizers are programs that are already laws that stimulate aggregate demand in a recession and hold down aggregate demand in a potentially inflationary period.
a. Automatic b. Temporary c. Planned d. Economic
Protectionism may fail to reduce a current account deficit because it
A. depreciates the dollar. B. invites retaliation, which hurts exports. C. encourages exports. D. does not reduce imports.
In the tourist-trap model, a consumer might pay more than marginal cost for a good sold in a competitive market if the cost of possibly finding the good cheaper is more than the markup over marginal cost
What will be an ideal response?