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:

Reaction

A process in which substances, the reactants, transform into different substances, the products, through a chemical change.

Reaction

A process in which substances, the reactants, undergo chemical changes to form new substances, known as products.

Product

The substances that result from the completion of a chemical reaction.

Ethylene Glycol

A colorless, viscous liquid with sweet taste commonly used as an antifreeze in automobile radiators and in the manufacture of polyester fibers and resins.