The Consumption Function Implies That

question 125

Multiple Choice

The consumption function implies that

• A)Disposable income inversely influences consumption.
• B)Consumption increases as disposable income increases.
• C)Autonomous consumption changes when people have low incomes.
• D)None of the choices are correct.

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Definitions:

Equity Security

A financial instrument representing ownership interest in a company, such as stocks, which entitles shareholders to vote on corporate matters and receive dividends.

Debt

An amount of money borrowed by one party from another, under the agreement that it will be repaid, often with interest.

Common Stock

A type of security signifying ownership in a corporation and entitling the holder to a share of the company's profits, essentially a mode of holding equity in the corporation.

Dividend Growth Model

A method used to value a company's stock by using predicted dividends and factoring in the growth rate of the dividends.