Real Consumption Is a Function of Real Disposable Income, but the Simple

question 222

Multiple Choice

Real consumption is a function of real disposable income, but the simple Keynesian model uses real GDP instead of real disposable income. This is appropriate since

• A) real disposable income tends to move proportionately with real GDP.
• B) real disposable income is a fixed percentage of real GDP.
• C) real GDP is a fixed percentage of real disposable income.
• D) we cannot measure either exactly and the purpose of the exercise is theoretical only.

---

Definitions:

Working Poor

Individuals who are employed yet live in conditions of poverty due to low wages and limited work hours.

Forbes 400

An annual ranking published by Forbes magazine of the 400 wealthiest American residents.

Wealthiest People

Individuals who possess a significantly higher amount of capital or assets compared to the general population, placing them at the top of the wealth distribution.

Inherited Wealth

Assets and properties passed down from one generation to the next through familial lineage.