Following Is Consumption Schedules for Three Private Closed Economies

question 8

Multiple Choice

Following is consumption schedules for three private closed economies.DI signifies disposable income and C represents consumption expenditures.All figures are in billions of dollars.Refer to the data below.Suppose the consumption is increased by $2 billion in each of the three economies.This change could have been caused by:

• A)a decrease in consumer wealth.
• B)expectations of higher future income.
• C)an increase in taxation.
• D)an increase in saving.

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Definitions:

Tendency

An inclination towards a particular type of behavior, action, or thought.

Possibilities

Various potential outcomes or options that may arise from a given situation or set of circumstances.

Simulation Heuristic

A cognitive process people employ to assess the frequency or likelihood of events based on how easily they can imagine those events occurring.

Error

A mistake or inaccuracy, which can occur in reasoning, perception, action, or judgment.