In a Simple Macro Model, an Increase in Households' Wealth

question 50

Multiple Choice

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

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

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Definitions:

Alternatives

In decision-making, these are the different options or choices available to individuals or organizations from which they can choose.

Identification and Definition

The process of recognizing and precisely describing the fundamental nature or characteristics of a concept, phenomenon, or problem.

Actual Situation

The real and current state or condition of something, as opposed to what was planned or expected.

Desired Situation

The ideal or preferred state or outcome that an individual or organization aims to achieve.