Here Is a Consumption Function: C = C₀ + MPC(Y_d)

question 95

Multiple Choice

Here is a consumption function: C = C₀ + MPC(Y_d) .Which of the following is true about the consumption function?

• A) Consumption will rise if autonomous consumption or disposable income rise.
• B) Consumption will fall if autonomous consumption falls or if the MPC rises.
• C) Consumption will rise if autonomous consumption rises, MPC declines, or disposable income rises.
• D) For every $1 rise in autonomous consumption, consumption will also rise by $1.
• E) a and d

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Definitions:

Cheque Delay

A situation where there is a postponement in the processing or clearance of a cheque by a bank.

Average Daily Float

This refers to the average amount of uncollected checks or electronic transfers in the process of clearing.

Cheques

A written, dated, and signed instrument that directs a bank to pay a specific sum of money to the bearer.

Collection Delay

The time lag between the date an entity issues an invoice and the date it actually receives payment.