The Consumption Function Shows the Relationship Between

question 4

Multiple Choice

The consumption function shows the relationship between

• A) planned consumption expenditures and disposable income.
• B) permanent income and savings.
• C) business inventory and real GDP.
• D) aggregate demand and aggregate consumption.

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Definitions:

Dividend Growth Model

A valuation method used to predict the price of a company's stock by using projected dividends and discounting them back to present value.

Retained Earnings

The portion of a company's profits that is retained or re-invested in the business instead of being paid out as dividends to shareholders.

Marginal Cost Of Capital

The cost of obtaining an additional dollar of new capital, which can influence investment and financing decisions.

Investment Opportunity Schedule

A curve depicting the relationship between the required rate of return on investments and the total amount of investment, illustrating how much investment can be undertaken for a given return.