The consumption function relates consumption expenditure to
A) saving.
B) the price level.
C) the interest rate.
D) disposable income.

Question

Quizplus · Accepted Answer

The consumption function relates consumption expenditure to disposable income. As disposable income rises, households tend to spend more on consumption, leading to an increase in consumption expenditure. The other options (saving, price level and interest rate) may affect consumption but are not necessarily part of the consumption function.

The Consumption Function Relates Consumption Expenditure to