If the Consumption Function Is C = 20 + 0

question 62

Multiple Choice

If the consumption function is C = 20 + 0.5Y_D,then an increase in disposable income by $100 will result in an increase in consumer expenditure by

• A)$25.
• B)$70.
• C)$50.
• D)$100.

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Definitions:

Net Capital Outflow

The difference between the purchase of foreign assets by domestic residents and the purchase of domestic assets by foreigners in a given period.

Foreign-Currency Exchange

The process of converting one currency into another currency, facilitating international trade and investment.

Exchange Rate

The exchange rate is the value of one currency for the purpose of conversion to another. It expresses how much of one currency is needed to buy a unit of another currency.

Loanable Funds

The money available for borrowing in the financial markets, determined by the savings of households and income not used for consumption or taxes by businesses and governments.