The consumption function shows the relationship between
A) consumption expenditure and disposable income.
B) inventory levels and real GDP.
C) consumption expenditure and planned income.
D) consumption expenditure and planned inventory investment.
E) consumption expenditure and the price level.

Question

Quizplus · Accepted Answer

The consumption function is an economic formula that shows the relationship between consumption expenditure (what people spend on goods and services) and disposable income (income after taxes and transfers). It is widely used in macroeconomics to study consumer behavior and its effect on the overall economy.

The Consumption Function Shows the Relationship Between