consumer spending not dependent on current income
What will be an ideal response?
autonomous consumption
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Suppose initially the federal budget is balanced. The economy then enters a period of expansion. What is likely to happen to the federal budget?
A) It will remain balanced. B) It will show a deficit. C) It will automatically stabilize. D) It will show a surplus.
The above figure shows supply and demand curves for milk. In an effort to help farmers, the government passes a law that establishes a $3 per gallon price support. The loss in social welfare resulting from this price support equals
A) k + i. B) j. C) [$3 ? (Q2 - Q1)] - h. D) $3 ? k.
Price discrimination is:
(a) The practice of charging different prices to different consumer groups for the same goods or services. (b) Illegal. (c) An example of returns to scale. (d) All of the above.
Using Figure 1 above, if the aggregate demand curve shifts from AD1 to AD2 the result in the short run would be:
A. P1 and Y2. B. P3 and Y1. C. P2 and Y2. D. P2 and Y3.