When Real Consumption Expenditure Is Plotted Against Real Disposable Income

question 21

Multiple Choice

When real consumption expenditure is plotted against real disposable income the resulting relationship is

• A) very weak.
• B) positive and very curvi-linear.
• C) positive and very close to linear.
• D) negative and very close to linear.
• E) virtually flat

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Definitions:

Direct Method

A cash flow statement reporting approach that lists major operating cash receipts and payments during a period.

Statement of Cash Flows

A financial report that provides aggregate data regarding all cash inflow and outflow a company receives from its ongoing operations and external investment sources.

Operating Activities

Involves the day-to-day actions that are taken for the main operations of a business, such as sales and purchase of goods or services, which are reflected in the cash flow from operating activities in the financial statements.

Comparative Balance Sheet

A financial statement that presents the balances of assets, liabilities, and stockholders' equity at two or more different points in time to analyze trends or changes.