Differentiate between an induced increase in consumption and an autonomous increase in consumption. How are they represented on a graph?


An induced increase in consumption is an increase in consumer spending that stems from an increase in consumer incomes. It is represented on a graph as a movement along a fixed consumption function.

An autonomous increase in consumption is an increase in consumer spending without any increase in consumer incomes. It is represented on a graph as a shift of the entire consumption function.

Economics

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If the firm is able to reduce MC from MC0 to MC1 the firm will produce at point ________ on the new demand curve and lower price to ________

A) E1; P1 B) E0; P0 C) E2; P2 D) E0 or E1; P0

Economics

If a good has an absolute price elasticity of 1, the demand for the good is

A) unit elastic. B) inelastic. C) perfectly elastic. D) elastic.

Economics

When the exchange rate fluctuates around a fixed central target, allowing for a moderate amount of fluctuation, while tying the currency to the target central rate, the exchange rate is under:

a. a horizontal band. b. a crawling peg. c. a managed float. d. an independent float. e. a currency board.

Economics

If national income is $100 billion, and MPC = 0.75, then autonomous consumption is ________ and MPS is ___________

a. $25 billion; 0.25 b. $75 billion; 0.75 c. unknown; 1.25 d. unknown; 0.25 e. $75 billion; 0.25

Economics