The amount of consumption in an economy depends:
a. Inversely on the level of saving
b. Directly on the level of disposable income
c. Inversely on the level of disposable income
d. Directly on the rate of interest
Answer: b. Directly on the level of disposable income
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Primary assets held by the Federal Reserve are
a. loans to commercial banks. b. U.S. government securities. c. Federal Reserve notes. d. reserve deposits by banks.
The classical model assumes that
A) imperfect competition predominates in most markets. B) people have money illusion. C) wages and prices are flexible. D) wages are flexible but prices are not.
An implication of the Employment Act of 1946 is that the government should respond to changes in the private economy to stabilize aggregate demand
a. True b. False Indicate whether the statement is true or false
A car sells at different prices at different dealerships in an oligopolistic market. If a consumer has imperfect information about the price of a car at each dealership, the consumer should
A. always gather all available information about prices. B. gather information about prices until the expected marginal utility of more information equals the marginal cost of gathering it. C. gather information about prices only if it can be gathered without cost. D. ignore information about prices because it is irrelevant to making an “optimally imperfect” decision.