The Consumption Function Will Shift Upward If Real Asset and Money

question 77

Multiple Choice

The consumption function will shift upward if real asset and money holdings:

• A) increase, if people expect prices to increase, if interest rates decrease, and if taxes decrease.
• B) increase, if people expect prices to increase, if interest rates increase, and if taxes increase.
• C) increase, if people expect prices to increase, if interest rates increase, and if taxes decrease.
• D) decrease, if people expect prices to decrease, if interest rates decrease, and if taxes decrease.

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Definitions:

Production Possibility Frontier

An illustration representing the maximum production capabilities for multiple goods with a certain amount of resources.

Opportunity Cost

The economic consequence of bypassing the closest better choice when making a decision.

Production Possibility Frontier

A curve depicting all maximum output possibilities for two or more goods given a set of inputs (resources, technology, etc.), assuming all resources are fully and efficiently utilized.

Labor Force

The total number of people who are employed and those actively seeking employment in an economy.