Consider the Consumption Function

question 127

Multiple Choice

Consider the consumption function . If
, a 2 percent demand shock:

• A) raises short-run output by 1 percent.
• B) raises short-run output by 0.5 percent.
• C) raises short-run output by 4 percent.
• D) reduces short-run output by 4 percent.
• E) has no impact on short-run output.

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Definitions:

Democratic

Relating to or supporting democracy, a system of government in which power is vested in the hands of the people, either directly or through elected representatives.

Campaign Contributions

Financial donations given to political candidates or parties to support their election campaigns.

Votes

Formal expressions of choice or opinion, either positive or negative, made by an individual or body to make decisions in a democratic process.

Lobbies

Organizations formed by special interest groups to advise and influence politicians.