If an Increase in One Variable Causes a Decrease in Another

question 154

Multiple Choice

If an increase in one variable causes a decrease in another variable, this is

• A)a direct relationship.
• B)a dependent relationship.
• C)an independent relationship.
• D)an inverse relationship.

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Definitions:

Autonomous Consumption

The portion of consumption spending that does not change with changes in income level, reflecting basic consumption needs.

Disposable Income

Disposable income is the amount of money that households or individuals have available for spending and saving after income taxes are accounted for.

Consumption

The use of goods and services by households or individuals, forming part of the aggregate demand in an economy.

Induced Consumption

The portion of consumer spending that varies with income. As income increases, consumers will spend more, and as income decreases, consumers will spend less.