In a Simple Macro Model, a Decrease in Households' Wealth

question 32

Multiple Choice

In a simple macro model, a decrease in households' wealth is generally assumed to

• A)cause an upward shift in the consumption function.
• B)affect only saving, not consumption.
• C)cause no change in consumption because consumption is a function of disposable income only.
• D)cause a downward shift in the consumption function.
• E)cause no change in consumption because the decline is always expected.

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Definitions:

Compound

A compound is a substance formed when two or more chemical elements are chemically bonded together.

Organic Product

A compound resulting from an organic reaction, often characterized by carbon-based structures.

Reaction

A procedure where compounds react to create new materials that have different characteristics.

Benzonitrile

An organic compound with the formula C7H5N, consisting of a benzene ring attached to a nitrile group.