The Consumption Function

question 165

Multiple Choice

The consumption function

• A) illustrates the relationship between real disposable income and real consumption spending
• B) illustrates the relationship between the price level and real consumption spending
• C) is the relationship between productivity and real consumption spending
• D) shows how real consumption increases when real disposable income decreases
• E) illustrates the relationship between real consumption spending and employment

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Definitions:

Quantity Sold

The total number of units of a product or service that have been purchased by customers in a specific time period.

Quantity Supplied

The total amount of a good that sellers are willing to sell at a given price over a specified period.

Equilibrium Price

The price at which the quantity of goods supplied is equal to the quantity of goods demanded.

Demand

The quantity of a particular good or service that consumers are willing and able to purchase at various prices during a given period of time.