The Consumption Function Has a Slope Less Than One Because

question 156

Multiple Choice

The consumption function has a slope less than one because:

• A)as disposable income increases, the real rate of interest will decline.
• B)saving and consumption are equal at all levels of income.
• C)as disposable income increases, consumption expenditures increase by an amount less than the increase in income.
• D)as disposable income increases, consumption expenditures increase by an amount greater than the increase in income.

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Definitions:

Balance Sheet

A document which condenses the details of a corporation's assets, liabilities, and owners' equity at a certain moment, offering a glimpse into its financial health.

Statement of Owner's Equity

A financial statement that shows changes in the equity of a company over a given period, including investments, withdrawals, and profit or loss.

Sales Journal

A specialized accounting journal that records the company's sales transactions, typically on credit.

Gross Profit

The difference between revenue and the cost of goods sold before deducting overheads, payroll, taxation, and interest payments.