With Consumption Expenditure on the Vertical Axis and Disposable Income

question 315

Multiple Choice

With consumption expenditure on the vertical axis and disposable income on the horizontal axis, the consumption function intersects the 45-degree line at $8 trillion. This result indicates that

• A) autonomous consumption spending is $8 trillion.
• B) consumption spending is $8 trillion when disposable income is $8 trillion.
• C) consumption spending is less than $8 trillion because taxes must be paid.
• D) consumption spending is more than $8 trillion because taxes have been paid.

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Definitions:

Milgram Experiment

A psychological experiment conducted by Stanley Milgram in the 1960s to study obedience to authority, where participants were instructed to administer electric shocks to another person.

Stanford University Prison Experiment

A psychological study conducted by Philip Zimbardo in 1971 at Stanford University, where students were assigned roles of prisoners and guards to explore the effects of perceived power.

Generalization

Drawing a conclusion about a certain characteristic of a population based on a sample from it.

Logical Support

The provision of reasons or evidence to justify a claim or argument.