Households Affected by a "Liquidity Constraint" Have Consumption ________ Sensitive

question 49

Multiple Choice

Households affected by a "liquidity constraint" have consumption ________ sensitive to changes in current income that is predicted by the LCH,and a saving ratio that may not ________ in a recession.

• A)less,rise
• B)less,fall
• C)more,rise
• D)more,fall

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Definitions:

Production Function

An equation or model that describes the relationship between inputs (like labor and capital) and outputs (goods or services) in the production process.

Capital

Assets or wealth, whether in the form of money or other resources, that are used or invested to generate income.

Determinant Of Output

Factors that influence the quantity of goods and services an economy can produce, such as labor, capital, technology, and government policies.

Market Prices

The current value at which goods or services are bought and sold in a competitive marketplace.