The Slope of the Consumption Function Is Equal to

question 253

Multiple Choice

The slope of the consumption function is equal to

• A)the change in consumption divided by the change in disposable income.
• B)the change in consumption divided by the change in personal income.
• C)the change in disposable income divided by the change in consumption.
• D)the change in national income divided by the change in consumption.
• E)the change in saving divided by the change in disposable income.

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Definitions:

Component Cost

The expense associated with acquiring or manufacturing each individual part of a product or service.

Flotation Cost

The total costs associated with issuing new securities, including underwriting fees and other expenses.

Preferred Stock

A class of ownership in a corporation that has a higher claim on assets and earnings than common stock, typically with dividends that are paid out before those of common stocks.

CAPM

The Capital Asset Pricing Model, a theory that describes the relationship between systematic risk and expected return for assets, particularly stocks.