Which of the Following Is True of Long-Run Consumption Functions

question 27

Multiple Choice

Which of the following is true of long-run consumption functions?

• A)Autonomous consumption is equal to zero in the long-run.
• B)The long run consumption functions are steeper than short run consumption functions.
• C)The marginal propensity to consume for the long run consumption function is almost equal to zero.
• D)The autonomous consumption is negative in long run consumption functions.
• E)The long run consumption function is represented by a straight line parallel to the horizontal axis.

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Definitions:

Typical Family

A standard or average family unit, often used in statistical analyses to represent an average household.

Standard Of Living

The degree of wealth, comfort, material goods, and necessities available to an individual, group, or society.

Inflation Rate

The rate expressed as a percentage at which the average price level of goods and services increases, leading to a decrease in purchasing power.

CPI

A rephrased definition for Consumer Price Index, which tracks changes in the price level of a market basket of consumer goods and services purchased by households.