In a Simple Macro Model,a Decrease in Households' Wealth Is

question 17

Multiple Choice

In a simple macro model,a decrease in households' wealth is generally assumed to

• A)cause no change in consumption because consumption is a function of disposable income only.
• B)cause no change in consumption because the decline is always expected.
• C)cause a downward shift in the consumption function.
• D)cause an upward shift in the consumption function.
• E)affect only saving,not consumption.

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Definitions:

Supply Curve

A graphical representation showing the relationship between the price of a good and the quantity supplied.

Demand Curve

A graphical representation of the relationship between the price of a good and the quantity of that good that consumers are willing to purchase.

Product Supply Curve

A graphical representation showing the relationship between the price of a product and the quantity of the product that a supplier is willing and able to supply.

Production Technology

The methods, equipment, and processes used to produce goods or services, influencing efficiency and output quality.