The consumption function is the relationship between consumption and:
A. total spending.
B. disposable income.
C. investment.
D. planned aggregate expenditure.
Answer: B
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Marginal utility theory implies that, starting from consumer equilibrium, a rise in income will __________.
Suppose the price of a box of cereal rises from $4 to $6. Using the midpoint method, what is the percentage change in price?
A) 50 percent B) 40 percent C) 33 percent D) 67 percent E) None of the above answers is correct.
If elasticity of demand is 0.2, elasticity of supply is 0.5, and a 10 percent excise tax is levied on the good:
A. the tax burden on consumers will be greater. B. the tax burden on suppliers will be greater. C. the tax burden will be the same for both. D. one cannot say who will bear the greater burden without knowing the tax.
Implicit and explicit costs are different in that:
A. explicit costs are opportunity costs; implicit costs are not. B. implicit costs are opportunity costs; explicit costs are not. C. the latter refer to nonexpenditure costs and the former to monetary payments. D. the former refer to nonexpenditure costs and the latter to monetary payments.