Suppose the Aggregate Consumption Function Is Given by C =

question 126

Multiple Choice

Suppose the aggregate consumption function is given by C = 1 000 + 0.75YD,where C is consumption and YD is disposable income.If disposable income increases by $100,aggregate consumption will increase by _____ and autonomous consumption _____.

• A) $75;remains at $1 000
• B) $1 000;remains at $75
• C) $100;increases by $100
• D) $175;increases by $100

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Definitions:

Salvage Value

The predicted sale value of an asset at the end of its operational life.

Trade-In Allowance

The credit offered by a seller for an old item that is given as part of the payment for a new item, reducing the cash needed to complete the new purchase.

Accumulated Depreciation

This refers to the total amount of depreciation expense that has been recorded for an asset since it was acquired, reflecting its decrease in value over time.

Cash Price

The amount of money required to purchase a good or service using cash, as opposed to credit terms or financing.