Which of the following is true of induced spending?
A)It rises as income increases.
B)It is a function of income.
C)It is zero when income is zero.
D)It rises as income increase,it is a function of income,and it is zero when income is zero.

Question

Quizplus · Accepted Answer

Induced spending is the additional spending that occurs as a result of an increase in income. Therefore, it rises as income increases (partially true for option A). It is a function of income because the higher the income, the higher the induced spending (true for option B). Lastly, when there is no income (income is zero), induced spending is also zero (true for option C). Hence, option D is the correct answer as it includes all the partial truths of options A, B, and C.

Which of the Following Is True of Induced Spending