What is meant by the term induced consumption?
A)It is the portion of consumer spending that is unrelated to income levels.
B)It is the necessary amount of spending that consumers must undertake.
C)It is the portion of income which is not saved.
D)It is the portion of consumer spending which is dependent on the level of income.

Question

Quizplus · Accepted Answer

Induced consumption refers to the portion of consumer spending that is dependent on the level of income. As income increases, consumers tend to spend more, while they reduce spending when income decreases. Induced consumption is a fundamental concept in macroeconomics, as it explains how changes in income affect consumer spending and, thus, the overall level of economic activity.

What Is Meant by the Term Induced Consumption