We Should Expect the Consumption Function to Shift Downward If

question 210

Multiple Choice

We should expect the consumption function to shift downward if

• A)real interest rates rise.
• B)price levels fall.
• C)consumers become more optimistic about future incomes.
• D)consumers become more pessimistic about future incomes.

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Definitions:

Discount

The reduction applied to the original price of goods or services, often to encourage sales.

Call Premium

The additional amount a bond issuer must pay over the par value if they wish to redeem the bond before its maturity date.

Time To Maturity

The remaining time until a financial instrument, such as a bond, reaches its date of redemption and the principal amount is repaid to investors.

Total Return

The overall financial gain or loss on an investment over a specific period of time, including interest, capital gains, dividends, and distributions realized over the period.