Exhibit 8-2 Consumption Function

question 56

Multiple Choice

Exhibit 8-2 Consumption function

As shown in Exhibit 8-2, dissaving occurs:

• A) at $5 trillion.
• B) between 0 and $4 trillion.
• C) where disposable income is greater than $4 trillion.
• D) at $8 trillion.

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Definitions:

Compounded

In finance, it refers to the process where interest is calculated on the initial principal and also on the accumulated interest of previous periods.

Actual Annual

Refers to the true or realistic yearly financial or quantitative performance or output of an entity or activity.

Interest Rate

The cost of borrowing money or the return for investing money, usually expressed as a percentage of the principal amount per year.

Economic Rent

The portion of income earned from a factor of production (land, labor, or capital) that exceeds the minimum amount necessary for it to be utilized in its current use.