The Consumption Function Relates Consumption Expenditure to

question 241

Multiple Choice

The consumption function relates consumption expenditure to

• A) the interest rate.
• B) disposable income.
• C) saving.
• D) the price level.

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Definitions:

Government Revenues

The total income received by the government from taxes and non-tax sources.

Transfer Payments

Payments made by the government to individuals, such as social security or unemployment benefits, that do not correspond to a current supply of goods or services.

Market Interest Rate

The prevailing rate at which borrowers are willing to borrow money and lenders are willing to lend in the market, often influenced by the central bank's policies.

Investment

The act of allocating resources, usually money, in the expectation of generating an income or profit.