The Consumption Function Relates Consumption Expenditure to

question 241

Multiple Choice

The consumption function relates consumption expenditure to

• A) the interest rate.
• B) disposable income.
• C) saving.
• D) the price level.

---

Definitions:

Diversified Investor

An investor who spreads their investment across various assets to minimize risk.

Risk Premium

The additional return an investor demands for taking on a higher risk compared to a risk-free investment.

Non-diversifiable Risk

The part of an investment's risk that cannot be eliminated through diversification, pertaining to wider market or economic factors.

Systematic Risk

The peril present throughout an entire market or a portion of the market that cannot be alleviated by spreading investments.