A linear consumption function with a positive slope less than one means that if income increases consumption will ?
Correct answer: D. increase
- A. fall
- B. not change
- C. fluctuate
- D. increase
Explanation
A positive slope means consumption rises as income rises, while a slope below one means consumption rises by less than the increase in income. Therefore, consumption will increase.
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The economy is studied as a whole through national income, gross domestic product, inflation, unemployment, economic growth and business cycles. Coverage includes aggregate demand and supply, consumption and investment, money and banking, fiscal and monetary policy, exchange rates and balance of payments, which distinguishes macroeconomics from the study of individual markets.
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