With Consumption Expenditure on the Vertical Axis and Disposable Income

question 264

Multiple Choice

With consumption expenditure on the vertical axis and disposable income on the horizontal axis, the consumption function intersects the 45-degree line at $8 trillion. This result indicates that

• A) consumption spending is less than $8 trillion because taxes must be paid.
• B) consumption spending is $8 trillion when disposable income is $8 trillion.
• C) autonomous consumption spending is $8 trillion.
• D) consumption spending is more than $8 trillion because taxes have been paid.

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Definitions:

Maturity Structure

The classification of a portfolio or entity's liabilities based on the time frame until those obligations mature or are due for payment.

Obligations

Duties carried by entities or individuals that arise from contractual agreements, law, or regulation requiring them to act in a certain manner.

Capital Structure

Refers to the mix of different types of debt and equity that a company uses to finance its overall operations and growth.

Productive Capacity

The maximum output or production level that can be achieved with the available inputs and resources without stressing the production system.