Households Affected by a "Liquidity Constraint" Have Consumption ________ Sensitive

question 49

Multiple Choice

Households affected by a "liquidity constraint" have consumption ________ sensitive to changes in current income that is predicted by the LCH,and a saving ratio that may not ________ in a recession.

• A)less,rise
• B)less,fall
• C)more,rise
• D)more,fall

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Definitions:

Unitary-elastic

A demand or supply situation where the percentage change in quantity demanded or supplied is exactly equal to the percentage change in price.

Demand Curve

A graph showing the relationship between the price of a good and the quantity of that good consumers are willing and able to purchase at various prices.

Profit

The financial gain made by a business when revenue exceeds expenses.

Relationship

A connection, association, or involvement between two or more parties, often referring to interpersonal or business contexts.