When the Economy Enters an Expansion of a Business Cycle

question 90

Multiple Choice

When the economy enters an expansion of a business cycle, households become more optimistic about future disposable income.The increase in optimism leads to

• A) a shift upward of the consumption function.
• B) an increase in consumption expenditures.
• C) no change in the level of consumption expenditures.
• D) a movement upward along the consumption function.
• E) a movement downward along the consumption function.

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