The consumption schedule is drawn on the assumption that as income increases, consumption will:
A. be unaffected.
B. increase absolutely but remain constant as a percentage of income.
C. increase absolutely but decline as a percentage of income.
D. increase both absolutely and as a percentage of income.
C. increase absolutely but decline as a percentage of income.
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If the Board of Governors of the Federal Reserve System increases the reserve requirement, this change will ________.
A. decrease the excess reserves of member banks and thus decrease the money supply B. decrease the excess reserves of member banks and thus increase the money supply C. increase the excess reserves of member banks and thus decrease the money supply D. increase the excess reserves of member banks and thus increase the money supply
Other things constant, an increase in interest rates will
A) increase your incentive to borrow. B) increase your incentive to save. C) increase your incentive to buy a new car on credit. D) reduce your incentive to save.