The Five Most Important Variables That Determine the Level of Consumption

question 169

Multiple Choice

The five most important variables that determine the level of consumption are

• A)disposable income,wealth,expected future income,price level,and interest rate.
• B)wealth,savings account balances,checking account balances,stock portfolio balances,and bond portfolio balances.
• C)government purchases,interest rates,income,taxes,and transfers.
• D)government purchases,saving account balances,wealth,interest rates,portfolio balances.

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Definitions:

Accounts Receivable

Represents the money that a company is entitled to receive because it has provided customers with goods and/or services.

Cash Realizable Value

The amount of money that can be obtained from an asset during its disposal or liquidation, after deducting any associated costs.

Note Receivable

This is a written promissory note where one party promises to pay another party a definite sum of money either on demand or at a specified future date.

Interest

The cost of borrowing money, expressed as a percentage of the total amount loaned, or the income earned on invested capital.