The consumption function shows the relationship between planned real consumption spending and
A) planned real saving. B) the average propensity to consume.
C) real disposable income. D) the marginal propensity to consume.
C
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Identify a statement that is true about a linear demand curve.
A. Along a linear demand curve, both the slope and price elasticity are constant. B. Along a linear demand curve, the price elasticity is constant, but the slope varies. C. Along a linear demand curve, total revenues are constant. D. Along a linear demand curve, the slope is constant, but the price elasticity varies. Along a linear demand curve, total revenues are negative.
Federal Reserve policy appears to be
A) more concerned with avoiding recession rather than preventing inflation. B) more concerned with preventing inflation rather than avoiding recession. C) equally concerned with avoiding recession and preventing inflation. D) motivated by whether inflation or recession is the current problem.
If the government wishes to maximize its tax revenue, it should
A) recognize that too high of a tax rate can decrease the tax base. B) engage in static tax analysis. C) recognize that an increase in the tax rate will lead to an increase in tax revenues. D) use only flat taxes.
Given the strict quantity theory of money, if the quantity of money were decreased by 50 percent, prices would
a. fall by 50 percent. b. rise by 50 percent. c. increase by 100 percent. d. decrease by 100 percent.