Autonomous Consumption Is 50

question 18

Multiple Choice

Autonomous consumption is 50. With every increase of one dollar in disposable income, consumption increases by 60 cents. The marginal tax rate is 10 per cent. The equation of the consumption function is

• A)C = 50 + 0.54Y
• B)C = 50 + 0.54YD
• C)C = 50 + 0.5Y
• D)C = 50 + 0.5YD

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Definitions:

Price Level

A gauge for the mean cost of products and services across an economy at a given time.

Short-Run Aggregate Supply

Represents the total supply of goods and services that firms in an economy plan on selling during a short time period, based on the current price level.

Aggregate Demand

The total demand for goods and services within a particular market or economy at a given price level and period.

Equilibrium Output

The level of output where the quantity of goods produced equals the quantity of goods consumed, resulting in a stable economy.