If the Consumption Function Is C = 25 + 0

question 120

Multiple Choice

If the consumption function is C = 25 + 0.9y and income increases by $100, then consumer spending will increase by

• A) $10.
• B) $25.
• C) $90.
• D) $115.

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Definitions:

High Unemployment

refers to a situation where a substantially higher percentage of the workforce is not engaged in employment, suggesting economic distress.

Inflation

The swell in the general price range for goods and services, shrinking the buying power of consumers.

Deflation

A decrease in the general price level of goods and services, often accompanied by a reduction in the money supply and credit.

Mildest Recession

A period of economic downturn that is less severe in terms of duration and decrease in GDP compared to typical recessions.