The Determination of Consumption as a Function of Current Disposable

question 46

Multiple Choice

The determination of consumption as a function of current disposable income is most strongly associated with:

• A) John Maynard Keynes.
• B) Irving Fisher.
• C) Franco Modigliani.
• D) Milton Friedman.

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Definitions:

Weak Axiom

A principle in consumer theory stating that if a consumer prefers bundle A over bundle B when prices are constant, then the consumer will not choose B over A if the price of A decreases and B's price remains unchanged.

Revealed Preferences

A concept in economics that preferences of consumers can be inferred by observing their purchasing habits and behaviors.

Francs

A former unit of currency in France and other countries, replaced by the Euro in many instances.

Utility Function

An equation that assigns numerical values to different combinations of goods and services, capturing the level of satisfaction or preference that an individual derives from these combinations.