The consumption function relates the consumption expenditure decisions of households to
A) the level of disposable income.
B) investment decisions of firms.
C) saving decisions of households.
D) the nominal interest rate.
Correct Answer:
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Q11: Real GDP
A) is always greater than aggregate
Q12: In the very short run, the components
Q13: According to the Keynesian theory, the typical
Q14: The components of aggregate expenditure include
I. imports.
II.
Q15: In the Keynesian model of aggregate expenditure,
Q17: Saving equals
A) disposable income minus taxes.
B) disposable
Q18: A consumption function shows a
A) negative (inverse)
Q19: Disposable income is equal to
A) consumption expenditure
Q20: If firms set prices and then keep
Q21: A movement along the consumption function is
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