In the Keynesian consumption function, autonomous consumption refers to consumption that occurs
Correct answer: B. Even when disposable income is zero
- A. Only when interest rates are falling
- B. Even when disposable income is zero
- C. Only when government transfers increase
- D. After planned investment becomes positive
Explanation
Autonomous consumption does not depend on current disposable income and may be financed through savings, borrowing, or existing assets. Consumption that changes with disposable income is induced consumption.
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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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