When the Consumption Function Lies Below the 45° Line, Households

question 140

Multiple Choice

When the consumption function lies below the 45° line, households

• A)spend all of any increase in disposable income.
• B)consume more than their disposable income.
• C)are saving some portion of their disposable income.
• D)save all of any increase in disposable income.
• E)are dissaving.

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Definitions:

Paasche Price Index

The Paasche Price Index is a consumer price index used to measure the change over time in the prices of a basket of consumer goods and services, weighted by the purchases made in the current period.

Doggerel

A term unrelated to economics, referring to irregularly or poorly constructed verse, often of a humorous or trivial nature.

Paasche Price Index

An economic indicator that measures the change over time in the cost of a fixed basket of consumer goods and services, using the current period as the base.

Doggerel

Verse or words that are poorly written or expressed, often characterized by clichés, sloppy meter, and a lack of seriousness or artistic depth.