The Consumption Function Shows the Relationship

question 320

Multiple Choice

The consumption function shows the relationship

• A)between households' disposable income and their consumption spending.
• B)between investment and rate of return.
• C)between consumption spending and capital gains.
• D)between government spending and tax collection.

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Definitions:

Recorded

The act of entering financial transactions into the accounting records of a company.

Effective-Interest Method

A way of calculating the amortized cost of a bond and of allocating interest expense over the bond's life, reflecting the actual interest rate earned.

Discount on Bonds Payable

The difference between the face value of a bond and its selling price, when sold for less than its face value.