Assume That the Quantity Consumed of Pizza Is Dependent on Three

question 227

Multiple Choice

Assume that the quantity consumed of pizza is dependent on three factors: the price of a pizza, the income of pizza purchasers, and consumersʹ taste for pizza. When graphing the relationship between the price of a pizza and the quantity of pizza consumed

• A) the price of pizza and quantity consumed of pizza are the only variables that are allowed to change.
• B) consumersʹ taste for pizza and the income of pizza purchasers are the only variables that are allowed to change.
• C) the price of a pizza and the income of pizza consumers are the only variables that are allowed to change.
• D) None of the above answers are correct.

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Definitions:

Reserves

Deposits that banks have received but have not loaned out.

Interest Rate

The cost of borrowing money, typically expressed as a percentage of the amount borrowed, paid to the lender over a specified period.

Spending Multiplier

The ratio of the change in total output to the initial change in spending that brought it about.

Marginal Propensity

The proportion of an additional income that an individual or population spends on consuming rather than saving.