The slope of the consumption function:
A. is horizontal.
B. equals 1.
C. equals the marginal propensity to consume.
D. is vertical.
Answer: C
You might also like to view...
Developing countries are starting to converge with developed countries in the long run in what respect?
a. Growth rate b. Income inequality c. Population d. Per capita income
A decrease in the average price level leads to a decrease in the purchasing power of wealth
a. True b. False Indicate whether the statement is true or false
If a poor family has three children in public school and a rich family has two children in private school, the ability-to-pay principle would suggest that
a. the poor family should pay more in taxes to pay for public education than the rich family. b. the rich family should pay more in taxes to pay for public education than the poor family. c. the benefits of private school exceed those of public school. d. public schools should be financed by property taxes.
When an economy experiences deflation, investment will:
A. increase, because businesses will spend cash instead of borrowing it. B. increase, because businesses will take out loans that will increase in value. C. decrease, because businesses will spend cash instead of borrowing it. D. decrease, because businesses will not take out loans that will increase in value over time.