The Consumption Function Is Based on the Assumption That as Real

question 112

Multiple Choice

The consumption function is based on the assumption that as real disposable income rises,aggregate desired consumption

• A)will fall and desired saving will rise.
• B)will rise and desired saving will fall.
• C)and desired saving will both rise.
• D)remains constant and desired saving will rise.
• E)remains constant and desired saving will fall.

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Definitions:

Resource Allocation

The process of distributing available resources among various competing needs or projects in order to maximize overall efficiency or achieve a desired outcome.

Economic Profits

The distinction in a company's finances that results from deducting both tangible and intangible costs from the total revenue.

Perfectly Competitive Industry

Describes a market structure where many firms sell identical products, entry and exit are easy, and no single buyer or seller has control over prices.

Variable Input

An input whose quantity the firm can vary at any time (for example, labor).