According to the circular flow of income and output, saving causes
A) total output to fall.
B) consumption expenditures and total output to fall.
C) consumption expenditures to fall short of total output.
D) investment spending to fall.
C
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Which of the following is a definition of the consumption function?
a. A functional relationship between real consumption spending and real disposable income b. A functional relationship between real consumption spending and the interest rate c. A functional relationship between real consumption spending and wealth d. A functional relationship between real consumption spending and total spending e. A functional relationship between real consumption spending and net taxes
If cash is deposited into a checking account, the supply of money increases.
Answer the following statement true (T) or false (F)
The principle that individuals and firms pick the activity level where the incremental benefit of that activity equals the incremental cost of that activity is known as the:
A. marginal principle. B. principle of opportunity cost. C. principle of diminishing returns. D. spillover principle.
Economists have used ________ and ________ in experiments designed to determine whether consumers care about fairness when they make decisions
A) the income effect; the substitution effect B) Giffen goods; luxury goods C) network externalities; the endowment effect D) the ultimatum game; the dictator game