Autonomous Consumption Is Defined As

question 10

Multiple Choice

Autonomous consumption is defined as:

• A) the level of consumption that depends only on the exchange rate.
• B) the consumption expenditures incurred by the government.
• C) the level of consumption that does not depend on income.
• D) an equilibrium condition that needs to be met for the aggregate expenditure model to work.
• E) the part of consumption that is related to investment.

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Definitions:

Income Elasticities

Income elasticities measure how the quantity demanded of a good changes in response to a change in consumers' income.

Normal Goods

Goods for which demand increases as consumer income rises, and decreases as consumer income falls.

Inferior Goods

Goods for which demand decreases as consumer income rises, in contrast to normal goods, where demand increases with higher incomes.

Price Elasticity

A measure of how much the quantity demanded of a good responds to a change in the price of that good, reflecting the sensitivity of consumers to price changes.