Consider the Consumption Function in a Simple Macro Model with No

question 41

Multiple Choice

Consider the consumption function in a simple macro model with no taxes.At the level of national income where APC = 1,the nation's households are

• A)consuming all of their disposable income.
• B)allocating their income equally between saving and consumption.
• C)saving a portion of their income,but saving is less than consumption.
• D)spending more than their current income.
• E)saving all of their disposable income.

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Definitions:

Market Interest Rate

The prevailing rate at which borrowers can obtain loans and lenders can offer funds in the financial market.

Market Interest Rates

The rates of interest charged by lenders on loans or paid on deposits, which fluctuate based on demand, supply, and the overall economic conditions.

Equity Investment

Money that is invested in a company by purchasing shares of that company, typically with the expectation of income from dividends and capital gains as the stock appreciates.

Preferred Stock

A class of ownership in a corporation that has a higher claim on its assets and earnings than common stock, usually with a fixed dividend.