A Change in Consumption, in Response to a Change in Income

question 148

Multiple Choice

A change in consumption, in response to a change in income, is

• A)unplanned consumption.
• B)autonomous consumption.
• C)induced consumption.
• D)equilibrium consumption.
• E)planned consumption.

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Definitions:

Depreciation

The accounting method of allocating the cost of a tangible asset over its useful life, reflecting wear and tear or obsolescence.

Time Value

A financial principle acknowledging that receiving money now is more advantageous than receiving the same amount in the future due to its earning potential.

Payback Method

A capital budgeting technique that calculates the time required to recoup the initial investment through cash inflows.

Accounting Rate

Often refers to the accounting rate of return (ARR), a financial ratio used to measure the profitability of an investment, calculated by dividing the average annual profit by the initial investment cost.