With Consumption Expenditure on the Vertical Axis and Disposable Income

question 315

Multiple Choice

With consumption expenditure on the vertical axis and disposable income on the horizontal axis, the consumption function intersects the 45-degree line at $8 trillion. This result indicates that

• A) autonomous consumption spending is $8 trillion.
• B) consumption spending is $8 trillion when disposable income is $8 trillion.
• C) consumption spending is less than $8 trillion because taxes must be paid.
• D) consumption spending is more than $8 trillion because taxes have been paid.

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Definitions:

Self-Interested

Describes individuals or entities that act in their own best interest, aiming to maximize their own benefits and minimize costs.

Produce Efficiently

The process of producing goods or services in a way that minimizes waste and maximizes output using the least resources.

Technological Improvements

Advances in technology that enhance productivity, efficiency, and quality in goods and services.

Demand Falls

A situation where the quantity demanded of a product decreases, often due to changes in price, income, or preferences.