Refer to the Information Provided in Table 22 -Refer to Table 22

question 21

Multiple Choice

Refer to the information provided in Table 22.4 below to answer the question(s) that follow.
Table 22.4
$$\begin{array} { | c | c | } \hline \text { Aggregate } \\\text { Income } ( \boldsymbol { Y } ) & \begin{array} { c } \text { Aggregate } \\\text { Consumption } ( C ) \end{array} \\\hline 8 & 10 \\\hline 12 & 13 \\\hline 20 & 20 \\\hline 32 & 31 \\\hline\end{array}$$
-Refer to Table 22.4. Which of the following consumption functions best fits the values in the table?

• A) C = 8 + 0.5Y
• B) C = 3 + 0.75Y
• C) C = 4 + 0.9Y
• D) C = 5 + 0.8Y

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Definitions:

Effective Annual Rate

The interest rate on an investment or loan that is compounded annually, reflecting the full amount of interest paid or earned over a year.

Compounding

The process where the value of an investment increases because the earnings on an investment, both capital gains and interest, earn interest as time passes.

Rate of Return

An indicator of the efficiency of an investment, measuring how much profit or loss has been made compared to its initial cost, represented as a percentage.

Cash Flows

The movement of money into and out of a business, representing earnings and expenses.