The Consumption Function Describes

question 117

Multiple Choice

The consumption function describes

• A)the negative relationship between consumption and government spending.
• B)the positive relationship between consumption and income.
• C)the negative relationship between consumption and the interest rate.
• D)the negative relationship between consumption and income.
• E)the positive relationship between consumption and the interest rate.

---

Definitions:

Equilibrium Price

The price point in the market where the amount of goods being offered is the same as the amount of goods being sought by consumers.

Equilibrium Quantity

The quantity of goods or services supplied and demanded at the equilibrium price.

Demand Shifts

Changes in the demand curve due to factors other than the price of the good itself, such as changes in consumer preferences, income, or the prices of related goods.

Quantity Demanded

The entirety of a good or service that buyers are willing and have the ability to buy at a stated price.