If the Consumption Function Is Given by C = 150

question 155

Multiple Choice

If the consumption function is given by C = 150 + 0.85Y and Y increases by 1 unit, then savings:

• A)decreases by 0.85 unit
• B)decreases by 0.15 unit.
• C)increases by 0.15 unit.
• D)increases by 0.85 unit.

---

Definitions:

Price Floor

A minimum price set by the government for certain goods and services, intended to ensure fair conditions for producers.

Shortage

A situation where demand exceeds supply, often leading to rising prices and unmet consumer needs.

Surplus

An excess of income or assets over expenditure or liabilities in a given period, often referring to profit or the amount of goods produced over what is needed.

Price Ceiling

A restriction enforced by the government on the highest price allowable for a product or service.