At a Fixed Income Level, an Increase in Consumption Which

question 151

Multiple Choice

At a fixed income level, an increase in consumption which is accompanied by a decrease in savings is reflected by

• A) an upward rotation of the consumption function.
• B) a downward rotation of the consumption function.
• C) an upward shift of the consumption function.
• D) a movement up along the consumption function.

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Definitions:

Hicks Version

Refers to John Hicks' adaptation of consumer demand theory, particularly in relation to indifference curves and utility maximization.

Substitution Effect

A modification in buying behavior triggered by a change in goods' comparative prices, prompting people to switch from one product to another.

Indifference Curve

A graph representing combinations of goods that provide the same level of satisfaction to a consumer.

Rational Consumer

An economic concept describing an individual who makes choices that maximize their utility or benefit, based on their preferences and constraints.