Empirical Studies of Aggregate Consumption Have Shown That

question 13

Multiple Choice

Empirical studies of aggregate consumption have shown that

• A)100% of the variation in consumption can be explained by changes in current income
• B)wealth effects generally account for only a small amount of consumer expenditures
• C)wealth effects generally are very large, which explains the large variations in consumption from year to year
• D)changes in wealth have a bigger impact on consumption than changes in income
• E)the marginal propensity to consume out of wealth is close to one

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Definitions:

Outstanding Checks

Refers to checks that have been written and recorded in the accounting records but have not yet cleared the bank.

NSF Check

A check that a bank returns without honoring because the account on which it was drawn does not have sufficient funds.

Outstanding Checks

Outstanding checks refer to checks that have been written and recorded in the paying entity's ledger but not yet cashed or cleared by the recipient.

Checks Cleared

The process where bank checks are verified and funds are transferred from the check writer's account to the recipient's account.