The consumption function describes the relationship between
A) investment and interest rates. B) consumer spending and income.
C) consumers and firms. D) prices and demand.
B
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When the expected inflation rate? ________, the short?run Phillips curve? ________.
A. ?falls; shifts upward B. rises; shifts downward C. ?rises; shifts upward D. falls; does not shift E. rises; might shift upward or downward depending on how the long?run Phillips curve shifts
According to the traditional Keynesian approach, if the government increases taxes, then
A) real Gross Domestic Product (GDP) will fall and the price level will remain constant. B) real Gross Domestic Product (GDP) will fall but the price level will rise. C) both real Gross Domestic Product (GDP) and the price level will fall. D) real Gross Domestic Product (GDP) will remain constant but the price level will rise.
Inventories are included in GDP because
A. they are value added to final goods. B. they were produced and are sold in their final form. C. they will depreciate. D. they are considered government spending.
Economic profits and losses:
A. are both considered by economists to be a part of production costs. B. are essential to the reallocation of resources from less desired to more desired goods. C. have no influence on the composition of domestic output. D. equalize the distribution of income in the long run.