The consumption function shows the relationship between
A) interest rates and planned real consumption.
B) employment and planned real consumption.
C) the price level and planned real consumption.
D) real disposable income and planned real consumption.

Question

Quizplus · Accepted Answer

The consumption function is a relationship between real disposable income and planned real consumption, meaning it shows how much individuals plan to consume based on their income. As their income increases or decreases, their planned consumption also changes. The other choices, such as interest rates, employment, and price level, may have an impact on consumption, but they are not the main factors included in the consumption function.

The Consumption Function Shows the Relationship Between