Consider the Consumption Function in Our Macro Model

question 130

Multiple Choice

Consider the consumption function in our macro model.Which of the following statements is correct? The consumption function

• A)and the aggregate expenditure function describe the same functional relationship.
• B)describes the relationship between desired consumption expenditure and the factors that determine it,like national income.
• C)refers to the relationship between consumption expenditure and relative prices.
• D)refers to the relationship between an individual's consumption and his/her wealth.
• E)is relatively unimportant in macroeconomics,because consumption is such a small component of aggregate expenditure.

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Definitions:

Grades

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Basic, instinctive impulses that motivate behavior, such as hunger, thirst, and the drive for sexual reproduction.

Unlearned

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External Incentives

External factors or rewards that motivate behavior, such as money, grades, or social recognition.