A Movement Along the Consumption Function Is the Result of Changes

question 67

Multiple Choice

A movement along the consumption function is the result of changes in

• A) expected future income.
• B) disposable income.
• C) the real interest rate.
• D) All of the above answers are correct.

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Definitions:

Consumption Expenditures

The total amount of money spent by households and individuals on goods and services for personal use.

Circular Flow Diagram

A visual model of the economy that shows how dollars flow through markets among households and firms.

Households

Economic units that consist of all individuals who live together in one dwelling, making joint decisions about consumption and labor.

Circular Flow Model

An economic model illustrating the continuous movement of money, goods and services, and factors of production between producers and consumers in an economy.